China’s Statistical Challenges Stymie Accountable Development

According to a new report from Renmin University, in 2005–09 there were significant differences between China’s statistical data for provincial energy use when aggregated using local government data versus when calculated by a province as a whole. This gap between bottom-up and top-down statistics is also evident at the national versus provincial level.

2011 GDP growth rate: goals claimed by individual provinces are significantly larger than national target of 8%

It’s a well-known fact that the mismatch between national statistics and aggregated provincial data is an ongoing challenge in China. Reports indicate that in recent years, estimates for national energy consumption using aggregated provincial data have been up to 15 percent higher than the national total figure.

And it’s not just energy data that faces accountability issues. The aggregate of the Gross Domestic Product (GDP) statistics reported by local governments, for instance, is often larger than the overall national figure released by the National Bureau of Statistics (NBS). In 2004, the aggregate provincial GDP surpassed the national figure by almost 20 percent. After that, the gap shrank significantly but increased again in the past five years. The 2010 national and provincial GDP data still show an 8 percent gap.

So, it’s no wonder people are questioning what’s gone wrong with China’s statistical system.

The “official” explanation offered by the NBS is that national and provincial governments use different statistical criteria. For example, the national government uses energy balance data to calculate total energy consumption—which includes data for energy production, import/export, and storage. But it’s very hard for provincial governments to get their energy balance sheets right because they have difficulty measuring energy transfer among regions. And local governments (counties and towns) face significant challenges not just in collecting energy transfer data, but in carrying out routine statistical tasks in general.

One problem is that county-level statistical bureaus in China are often under-staffed for the multitude of tasks they must complete. Yet even the existing staff lack systematic training, further limiting the capacity of local governments to produce reliable accounting data. And Chinese businesses typically don’t pay much attention to energy consumption data either. The lack of a practical, scientific statistical standard or guidance for local governments and businesses has meant that the collection of data and information is often subject to arbitrary judgment.

Because of the different needs and capacities of national and provincial/local agencies, China’s national statistical system currently collects information only for businesses above a certain scale. For industries, the threshold is an annual revenue of 5 million yuan (about US$770,000). At the provincial and local levels, however, the standards and requirements for statistical reporting are less clear, so many local statistical agencies also include estimates for smaller-scale enterprises.

Obviously, this contributes to disparities among the statistical data generated and collected at different government levels. And these disparities have created problems, especially when accurate data is needed to support effective and accountable governance across the country.

In recent years, China has widely advertised its energy efficiency target, which set a goal of reducing national energy consumption per unit of GDP by 20 percent below 2005 levels by the end of 2010. Although Premier Wen stressed in May 2010 that the central government would utilize “iron-fist” approaches to achieve that goal—holding all provincial and local governmental leaders accountable—the final figure released by the National Development and Reform Commission (NDRC) showed only a 19.1 percent reduction. Yet, to-date, no provincial or local officials have been “punished” for failing to meet the assigned energy efficiency targets in their jurisdictions.

Perhaps Premier Wen was simply trying to push provincial and local officials harder to achieve the national target, and didn’t intend actual punitive measures. Yet even if Wen expected genuine accountability from his subsidiaries, he would have trouble identifying the right “culprit.” Most provincial and local statistical reports indicate that the regions did in fact accomplish their individual targets. And if the NBS or other national administrative agencies were to question these self-proclaimed numbers, it would be easy enough for local and regional officials to attribute the disparities to methodological problems with the current national-provincial-local statistical system.

This seems to be in accordance with western wisdom—i.e., hate the game, not the player. Indeed, under China’s command-and-control system of decision making, provincial and local officials have a strong incentive to exaggerate their performance and achievement with inflated numbers, especially in the absence of an effective monitoring and verification system. To enhance its governance, the central government would have to either change its reliance on an over-simplified system that accepts “numbers as achievement,” or strengthen the statistical system from the bottom-up. So far, it doesn’t seem like the government will significantly alter its governance pattern just yet.

The latest reports suggest that the Chinese government will continue to rely on its top-down approach of setting targets and reporting numbers. The Ministry of Industry and Information Technology (MII), for example, recently delegated responsibility for meeting the national target for shutting down inefficient production capacity in 2011 to individual provinces. Prior to that, the NDRC assigned to all provincial governments the preliminary goals for further energy intensity reduction during the 12th Five-Year period (2011–15). The government soon will delegate a carbon intensity target as well.

NAO's latest audit report

The good news is that the central government has started to reform and strengthen its national statistical system. The NBS has taken measures to unify regional standards for calculating GDP, with a focus on direct reporting from local governments. The National Audit Office (NAO) has conducted auditing work on energy-saving and emission-reduction efforts in more than 20 provinces between 2007 and 2009. In addition, the government is considering regularizing the Working Groups for Examining Energy Saving Efforts organized by the State Council.

Let’s hope all these measures will lead to a more transparent and reliable statistical system. After all, many of China’s grand plans for tackling climate change and fostering sustainable development are based on a credible data infrastructure. For instance, it’s likely that China may implement a cap-and-trade emissions system before the United States does, as we reported in a previous post. But to do this correctly, China will still need significant capacity building to get the basic numbers in its greenhouse gas inventory, and other critical measures, right.


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