China’s economic data are problematic as they only present a rosy picture instead of illustrating the actual difficulties and pressures facing the country, according to outspoken former finance minister Lou Jiwei, South China Morning Post reported on Dec. 13.
Lou’s comments arrived at a forum held by the China Centre for International Economic Exchanges in Beijing on Saturday, just one day after a three-day meeting of China’s central and provincial leaders to set the economic priorities for the next year.
He pointed out the contrary between the strong caution in the official statement after that leadership meeting, and positive indicators shown in economic data.
In the meeting statement, China’s decision makers warned that the country was encountering “threefold pressure” – contraction of demand, supply shocks and weaker expectations.
That kind of serious tone used to be uncommon, and has no relation with the robust figures of trade and factory activities of last month, after both production and consumption indexes beat market expectations in October, SCMP added.
“Why do we have the judgment of threefold pressure? Where is the data to support it? The numbers are all pretty good,” he said.
“There is not enough data showing the negative side.”
“Compare it with the United States, where they have both positive and negative data.”
Lou, who is now the director of the foreign affairs committee of the Chinese People’s Political Consultative Conference, the country’s top political advisory body, said there were measurement problems with the data, including, but not restricted to, the total number of companies, labor force participation rate and inequality index.
For instance, published data only showed how many companies had been created in China but did not reveal the number of firms that had disappeared.
By November 1, China had 150 million market entities (including enterprises, self-employed operations and rural cooperatives), about 100 million more than a decade earlier, according to the State Administration for Market Regulation.
“[But] among the 150 million entities, at least 40 million are not active,” Lou said, explaining that some firms had no business activities since registration and others were struggling to maintain operations.
The total number could also be exaggerated as it was difficult to deregister but quite easy to register, he added.
Moreover, Lou said labour force participation rate in China tended to be decreasing, but there was little data about it.
China’s Gini coefficient, which measures the income distribution across a population, was another problem.
The official data by National Bureau of Statistics (NBS) show a decline in China’s Gini coefficient, from a peak of 0.491 in 2008, to 0.468 in 2020, indicating an improvement of income equality.
However, Lou said the low reading was attributed to the fact that the indicator failed to count some business owners’ consumption within their companies.
He also pointed out that the ways China and the US conduct their fiscal stimulus added to the difference in statistical accuracy between the two countries.
While Americans received stimulus cheques with a precise recorded amount, poor Chinese were said to directly receive trillions of yuan from the authorities, for which the statistics remained intransparent.
“[But] how much we have given? At least what I heard was it was hard to say, we didn’t get much bailout money,” Lou said.
Despite all the above-mentioned data problems, former minister Lou said it was not NBS’ responsibility, and that there were “explanations” for choosing which numbers cannot be counted. But what these “explanations” are, he did not explain.