China advances reforms for data accuracy

Nearly 10 months after bypassing local governments to collect data directly from enterprises, the National Bureau of Statistics (NBS) has moved to build backup repositories for deep data analysis and processing. With one disaster recovery system going into operation at the NBS office this month, the NBS will soon install another backup repository to ensure both data safety and deep analysis in the event of disasters. The two systems, along with the National Data Center, which went into service in February to collect data directly from 700,000 enterprises, mark a milestone reform in China's statistical methodology. The move has cut out "middlemen" in reporting, improved the transparency of data production and prevented redundancy among enterprises and statisticians, said Li Yutao, chief of the statistics bureau of northeast China's Heilongjiang province. Previously, economic data submitted by enterprises had to progress through five links to reach the NBS. But with a click of the "submit" button, qualified enterprises can now report their raw data straight to the NBS. Statistics departments at different levels can also access the system for online verification, inquiries and data analysis. Moreover, the system records the revisions made by each person, Li said. The pilot program currently applies to only industrial and wholesale enterprises that post more than 20 million yuan (about 3.2 million U.S. dollars) in total annual sales, as well as retailers posting more than five million yuan in total annual sales. For catering enterprises, starred hotels and certified construction companies and real estate developers, benchmark operating revenues should be more than two million yuan each to qualify. Although qualified enterprises represent just a small fraction of the country's statistical objects, the reform will make it easier to digitalize statistics reporting in the future. In Heilongjiang, where some 10,000 enterprises are qualified to use the system, Li's bureau led an overhaul of existing documents and regulations that were inconsistent with the initiative and had them all annulled. The bureau then toughened inspections intended to root out irregularities and local officials who have meddled in direct data reporting. Data quality has improved, as the system effectively solves the problems of pseudo-enterprises, book-cooking and a lack of standardization, Li said. NBS chief Ma Jiantang said it is a primary political task of statisticians to improve the authenticity and accuracy of economic data. "Making data right is the core task and first duty of statisticians, this provides solid support for decision-makers in charge of making macroeconomic adjustments," he said, emphasizing the need to further improve statistical methods and verify raw data from enterprises. HEALTHY SKEPTICISM Public doubts over the accurate measurement of the Chinese economy have existed for some time. More Chinese are calling for the central government to protect the independence of statistics departments when collecting data. After the Survey and Research Center for China Household Finance of the Southwestern University of Finance and Economics (SUFE) announced that China's Gini index hit 0.61 in 2010, much higher than the global average of 0.44, public concerns over incorrect statistics have been extended to perceived flaws in China's statistics methodology. A key index that reflects the rich-poor gap in a given country, the Gini index measures income distribution on a scale of zero to one, with a reading higher than 0.6 signaling an astonishingly large income gap. But there is no official figure for comparison in China, as the last time the Chinese government published a Gini index for the whole country was in 2000, when it stood at 0.412. Ye Qing, deputy chief of the statistics bureau of central China's Hubei Province, said the suspended release of the index indicates the complexity of the measurements involved. Ma previously attributed the suspension to the lack of a standardized household survey system, as statisticians have long surveyed per capita net incomes in rural areas and per capita disposable income in cities. A unified statistical method may be adopted in 2013, allowing the NBS to release residents' income and the Gini index along with first quarter economic figures, the 21st Century Business Herald reported, citing a NBS household investigator. Another controversial measurement is the registered unemployment rate, which has barely budged beyond 4 to 4.3 percent since 2002. The surveyed unemployment rate issued by SUFE's Survey and Research Center for China Household Finance was 8.05 percent for June, almost twice the official figure. Finance critic Ye Tan said the NBS should release the surveyed unemployment rates it has been tracking on a trial basis to go along with international practices. REFORM ON RIGHT TRACK Senior overseas researchers have shown understanding of the "growth pains" that China's economy is facing. "There are some problems with Chinese statistics, but that is not unusual for developing economies. Moreover, I think things are slowly moving in the right direction," said Nicholas Borst, research associate and China program manager with the Peterson Institute for International Economics. He cited meddling by local officials, misinterpretation by analysts and a failure to survey migrant workers as three major sources of problems. "Efforts like the household survey are based off 'hukou' (household registration) status. Migrant workers who are outside of their home province for more than six months are often not included," he said. He said the NBS must continue to improve its data collection techniques by collecting data directly and bypassing local governments, as well as increasing the transparency of calculation methods. [ "For example, the NBS has started releasing quarterly GDP growth rates, which is a good step forward. However, due to a lack of transparency regarding how this data is calculated, many analysts are unable to recreate NBS' numbers," he said. Barry Bosworth, a senior fellow at the Brookings Institution, said the accurate measurement of economic growth is a universal problem, as growth depends upon the definition of what to include. "China lacks the broad range of statistical surveys available in the United States; yet, it is a very large and diverse economy. Improvements are being made in China's statistical system, but there are still too few surveys to provide cross-checks on the data," he said. Bosworth said price measurement is the greatest problem in Chinese statistics, as there is a lack of detailed measures for price changes in the consumer price index and for measuring prices in different industries. "The challenges in China are the same as those faced by other emerging market countries. China's data are of about the same quality as other Asian economies, but the NBS provides less detail and less information about its methods," he said. "The best way to inspire trust in the data is to publish lots of details and to be very forthcoming about the methods that are used," he said. "If the NBS provided a more detailed and timely set of statistics on the GDP and employment, it would resolve much of the uncertainty," he said.