China anti-corruption probe finds local governments still ‘fabricating’ economic data

Ji Siqi, South China Morning Post

Posted at Sep 04 2021 08:30 AM

Further cases of economic data fraud by local governments in China have been reported by the country’s top anti-corruption agency following a two-year investigation.

The National Bureau of Statistics (NBS) conducted two separate rounds of statistical inspections, covering 19 of mainland China’s 31 provincial jurisdictions, as well as nine departments within the State Council.

A report published on Thursday by the official newspaper of the Central Commission for Discipline Inspection, the Communist Party’s disciplinary watchdog, said that inspectors had found evidence of fraud in various cities across the country.

“In some cases, local party committees and governments forced subordinates and enterprises to fabricate figures at each level to complete their target achievement mission; some companies did not resist or object to the interference in their independent reporting rights, but instead catered to the local governments and relevant departments, in exchange for development support,” said Mao Youfeng, deputy NBS bureau chief, according to the report.

Local governments in China have long been suspected of fabricating economic figures, with the common perception among officials that their career prospects are still closely related to economic performance.

China’s top leaders, though, have signalled a shift from focusing on quantity to attributing more weight to the quality of economic development in recent years.

The NBS will carry out a further third round of checks and achieve “full coverage” of regular statistical inspections of provincial and regional party committees and governments before the end of the year, the report said.

According to the report, some governments instructed local enterprises to forge figures, with some even directly providing fake statistical tables for companies to “follow suit” to ensure a “steady increase”.

This corruption included predesignated monthly growth rates, while some local economic and information technology bureaus would even hold meetings at the beginning of each year to assign statistical fraud tasks, and offer “fraud subsidies” to enterprises.

In one case in a city in eastern China, an online group chat involving local officials and enterprises showed that the local government instructed companies to report more than 20 million yuan (US$3 millions) revenue from their main business.

Chat histories showed that if the reported figures did not add up to 20 million yuan, companies would be required to adjust their reported numbers.

If the companies failed to achieve the criteria, local officials in the group warned that they would be removed from the “national basic statistical units” database and would no longer enjoy preferential policies, including in relation to project applications.

Reporting revenue from their main business of above 20 million yuan is a key threshold for a company to be designated as “above scale”, with the number of “above scale” enterprises seen as a key indicator to gauge the strength of a local economy as this would affect economic indicators such as industrial output value and added value.

According to the group chat, local companies were also required to send their statistics to the local economic and information technology department to be checked before uploading them to the online system.

An employee from the local economic and information technology bureau even instructed enterprises to delete chat histories.

Other incentives included protecting local interests and obtaining policy preference from the central government.

In January 2017, the northeastern rust belt province of Liaoning became the first provincial jurisdiction to admit fabricating economic data.

It was found that subordinate cities and counties in Liaoning had reported inflated fiscal revenues by 20 per cent from 2011 to 2014. The province then reported a negative gross domestic product growth rate of minus 2.5 per cent in 2016.

Since then, various cities and provinces have also revised their previously reported fiscal figures, including Tianjin and Inner Mongolia.

“In general, local governments have been paying more and more attention to statistics work, but for some localities, there is still a gap between the implementation and the requirements from the central government,” said An Pingnian, director of the statistics enforcement and supervision department at the NBS.

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