Numbers to believe in

THERE are certain things I take for granted in life: that the sun will rise each morning, set each evening and that Chinese GDP statistics are bogus. Mysteriously, since 1980 GDP growth has never fallen much below 5%. That's in spite of the Tiananmen Square protests and the Asian financial crisis. I take China's growth numbers as a suggestion rather than fact and look to electricity output as a more reliable indicator.  

Our Economics focus this week suggests my current scepticism may be unfounded. Several sources who track Chinese data have found that recent estimates of growth seem reasonable. Carsten Holtz reckons that Chinese officials have not falsified aggregate nationwide output numbers for at least the last several years. Though he acknowledges overwhelming evidence that local officials falsified their numbers, in hopes of being promoted. That may change too. This month the government will introduce new penalties for local officials who falsify data. So China's figures will probably become even more reliable in the future.

The Chinese government projects that the economy will grow by 8% this year. It expects its fiscal expansion to make up for slackening export demand. As the downturn worsens, that may prove unrealistic. And if it is, it will be interesting to see if the Chinese government cops to lower-than-expected growth.

SOURCE: Economist.com