China’s problems with dodgy data are all in the past, according to the man in charge of government statistics.

China’s growth this year will probably exceed its annual target of about 6.5 per cent, Ning Jizhe, the head of the National Bureau of Statistics, said in an interview last week, adding that this feat will be based on accurate data.

“We have zero tolerance of any manipulation of statistics, and will strictly crack down on it, even if it’s a single case or restricted to a few regions,” Ning told Bloomberg Television in Beijing last week. Some regions previously falsified data, but the numbers now are generally trustworthy and internationally comparable, he said.

Accurate and timely data is key to understanding the world’s second-biggest economy, as investors and officials try to gauge the effects of the current campaign to cut excessive capacity and debt, and the trade dispute with the U.S. However, data has been suspect in the past due to deliberate manipulation of the numbers and the technical difficulty of measuring any economy, especially one changing as rapidly as China’s.

The remarkable steadiness and predictability of China’s growth rate has added to those questions. Over the past three years, growth has remained within a narrow 6.7 per cent to 6.9 per cent band, with some private researchers saying that the NBS over-estimates or under-estimates it, while others think they smooth out the pace of expansion.

People have also raised questions about provincial data, with now-Premier Li Keqiang reported to have said in 2007 that some regional GDP data was “man-made” and therefore unreliable. The province of Liaoning, which he was in charge of in 2005-2007, was recently found to be falsifying statistics, along with Jilin, Tianjin and Inner Mongolia.

Ning vowed to handle that problem with better technology, thorough investigations, and cutting regional officials out of the data-gathering process altogether. Excluding regional officials from statistics such as factory output data can ensure the reports go directly to Beijing, and the national bureau will compute GDP for each region as well as the nation by next year.

Fifteen years ago, the aggregate of economic output of all of China’s 31 regions was more than 10 per cent larger than the official national total, as local officials over-reported numbers from their own provinces. That gap will be narrowed to 1 per cent this year, according to Ning.

Stronger Enforcement

The special inspection division that’s mandated to combat fake data is now a team of 60 people, up from about 10 in April last year, according to the NBS. Those officials investigate every case of malfeasance, Ning said.

“Fudging or inflating the data won’t lead to promotions for officials, but only to demotions,” said Ning. “So who would manipulate the data? There isn’t any incentive.”

Notwithstanding Ning’s claim about growth for the rest of the year, the risks to the economy are rising. A broad swath of economic indicators were below expectations in July, with fixed-asset investment growth slowing to a record low pace in the first seven months of the year. State investment grew only 1.5 per cent in that period -- a record low and well below the 11.7 per cent in the same period last year -- as the government tightened access to borrowing.

“Slow state investment was due to a cleanup and regulatory review of the local governments’ infrastructure projects,” Ning said, adding that the review is almost done. “We’re still going to depend on infrastructure to stabilize investment and fix the weak links, which will require a joint effort by the state, the private sector and foreign businesses.”

Trade War Risks

Ning has led the statistics bureau since January 2017. He is also the vice chairman of the National Development and Reform Commission, China’s top economic planning body, and was a member of the negotiation team led by Vice Premier Liu He which talked trade with the U.S. Ning sees the trade war as the top risk to China in the second half of 2018.

“An important risk factor is the severe and complicated international economic conditions and the incoming changes, including both the trade conflict between China and the U.S. and that between U.S. and other nations,” Ning said, adding that China’s economic fundamentals are still sound as the nation’s growth doesn’t depend on external demand.

Ning has a Ph.D in economics from Renmin University of China, and was previously the chief adviser to Premier Li on economic policy, besides being in charge of long-term development plans, including developing China’s western regions.

Services Data

In the days after the interview, he was heading to Tianjin to supervise the ongoing nationwide economic census, which happens every four or five years. The census surveys tens of millions of businesses nationwide, and provides rare data on the services sector, which accounts for half of the economy but is missing from many official data sets.

The challenge in capturing what’s really happening doesn’t come only from the sheer size and variety of the economy, according to Ning. On top of the complexity of the census, many people are reluctant to report the true conditions, he said.

While some local governments were prone to over-reporting data in the past, “individuals and companies tend to under report,” Ning said, adding that they can pay less taxes and hide their wealth by doing so. “The wealthier residential compounds don’t even let the surveyors in.”