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Chinese economic data - Fudge-ocracy

The way to get ahead in China is to manipulate statistics

Mar 26th 2016 | SHANGHAI

IN THEORY Chinese officials receive promotions based on their performance

against a range of targets: delivering strong growth, maintaining social

stability and, until recently, enforcing the one-child policy. But scholars

debate whether the system really rewards those who excel according to these (in

any case flawed) metrics. Some believe the emphasis on merit is real, and helps

explain China s stunning economic progress over the past 35 years. Others

reckon that connections to the right leaders matter more for those trying to

advance their careers. New research, however, suggests a third option: that

those who get ahead are adept not at stimulating growth nor at currying favour,

but at cooking the books.

A recent paper from America s National Bureau of Economic Research uses

fertility rates as a way to test this theory. Economists have found a

relationship between GDP growth in an official s fiefdom and subsequent

promotion, but it is difficult to know how accurate the GDP figures are (a

question that haunts anyone following the Chinese economy). Population data are

different: in addition to the figures provided by local officials, China

conducts a census every ten years, revising population data all the way down to

the village level. That makes it possible to pinpoint where bureaucrats have

been fiddling the statistics.

Examining data on 967 mayors in 28 provinces from 1985 to 2000, Juan Carlos Su

rez Serrato and Xiao Yu Wang of Duke University and Shuang Zhang of University

of Colorado, Boulder, find that officials who claimed to have suppressed

population growth were rewarded. Mayors who reduced the local birth rate by one

child per 1,000 people per year by their own count had a 10% greater chance of

being promoted.

But the relationship between fertility rates and career trajectory disappears

when using the census data rather than the figures reported by the local

officials themselves. Mayors who received promotions were no better or worse at

curbing population growth than those who did not. The way to get ahead in the

Chinese bureaucracy, it seems, is to falsify statistics. It makes you wonder

what other data have been doctored.