Chinese Province Padded Economic Growth Data by 150% in 1st half of 2013

More evidence why we should not trust government statistics. 

Earlier, the Chinese government has admitted to hiding, editing and censoring economic data, now a province in China has been alleged to have severely bloated economic data by 125% in 2012 and 150% in 2013.

From Sina (hat tip Zero Hedge) [bold mine]

China's National Bureau of Statistics (NBS) on Thursday announced it had uncovered a serious case involving the faking of economic data by a county government in southwest China's Yunnan Province.

According to the NBS's publicized report, the government of Luliang had coerced local companies to report inflated industrial output value, resulting in artificially high economic figures.

Twenty-eight sampled local companies reported a total of 6.34 billion yuan (1.03 billion U.S. dollars) in industrial output value in 2012; however, the actual value was only 2.82 billion yuan, based on initial calculation, according to the report.

Similarly, 25 sampled local companies reported 2.74 billion yuan of industrial output value in the first half of 2013, but the NBS initially verified the actual value to be only 1.06 billion yuan.

Meanwhile, the county was also found to have faked investment data.

Companies complained that if they did not fraudulently report higher data, their reports would be returned by local government departments. They also said that fake reports would ensure they would enjoy favorable policies such as securing bank loans.

The NBS said that the misconduct has seriously affected the authenticity and independence of company data.

The NBS did not specify the reasons behind the county's faking of data but it is a well-known fact that local government leaders are assessed for their performances based on economic data. Nice-looking data sheets mean promotion opportunities.

Here is what I wrote early August

Many private companies are vehicles used by the local state to promote the political objectives of the national government, as well as, the career goals of local politicians. Thus as previously discussed, the interests of the private sector and the state has been complexly interwoven. Yet the same sectors have acquired huge debts from boondoggles as the above that has put the Chinese economy in jeopardy or has raised the risks of a China bubble bust with far reaching ramifications.

When governments increaslngly resort to the fudging of statistical data to spruce up their economic growth figures, then such may be construed as indications of heightened desperation. Caveat emptor