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GDP pursuit makes overblown GDP figures

Updated: 2006-08-09 06:55
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Local governments report higher GDP growth than central government

China's gross domestic product (GDP) grew 10.9 percent in the first half of this year, according to recent statistics from the National Bureau of Statistics (NBS).

But a report from the National Development and Reform Commission (NDRC)suggested that GDP growth in mainland provincial areas had been even higher, the Shanghai Securities News reported Tuesday.

The NDRC report claimed that the GDP of 31 provincial areas on the Chinese mainland had grown at an average rate of 12 percent during the first six months.

All the provincial regions reported two-digit GDP growth rate in the first half, with 23 of them above 12 percent.

If the provincial GDP figures for the first half are totaled, the resulting figure is 804.8 billion yuan (100.6 billion U.S. dollars) higher than the country's official GDP, according to the NBS.

Which is the correct figure? 10.9 percent or 12 percent?

"10.9 percent is pretty accurate", said Gao Huiqing, an expert with the State Information Center.

"Average GDP growth figures provided by the provinces have long been higher than the national figure," said Gao.

"For some years, the provinces report a growth rate 3 or 4 percentage points higher than the national growth rate provided by national statisticians."

Figures provided by local statisticians in the 31 provinces, municipalities and autonomous regions (excluding Hong Kong and Macao Special Administrative Regions and Taiwan Province) add up to a total GDP of 19.602 trillion yuan, 7.5 percent higher than the NBS statistics.

An NBS report affirms that China's GDP grew 9.9 percent in 2005. If local government statistics are to be believed, then GDP growth averaged 12.39 percent in 2005.

The gap between the average GDP growth reported by local governments and the figure published by NBS has widened since 2000. This gap was 1.7, 2.0, 2.6 and 2.8 percentage points respectively in 2000, 2001, 2002 and 2003.

As the most important index reflecting regional economic growth, GDP growth is still the goal pursued by local governments and officials.

Since many corporations have branches in different provinces, their output and investment may be counted several times by different regions, leading to an exaggerated GDP figure, the newspaper said.

To avoid overblown figures, the central government is trying to restructure the official achievement evaluation system by introducing the new concept of green GDP, which would calculate environmental and ecological costs along with economic growth.