THE PHANTOM PROVINCE IN CHINA’S ECONOMY
Didi Kirsten Tatlow
IHT Rendezvous, February 6, 2013
BEIJING - China has a "phantom province" pumping out nearly 5.8 trillion renminbi (about $925 billion) in gross domestic product last year, about equivalent to the output of its richest province, Guangdong, Chinese media reported this week.
Deliberately inflated figures from local officials are largely to blame, domestic media reported, as officials seek promotion for delivering the high growth demanded by the state. And the problem of systemic exaggeration in the economy is growing, not shrinking, as the country becomes richer and is increasingly integrated into the global economy.
The world is accustomed to remarkable growth from China, which is now the world's second-largest economy after zooming up the list to overtake Germany and Japan, and is projected by some to challenge the economic dominance of the United States. And other nations have grown accustomed to looking to China to drive global growth with those high numbers. As Yi Gang, the deputy governor of the People's Bank of China, the central bank, said at the World Economic Forum in Davos last month, "I think China's growth rate will be about 8 percent this year."
Yet back home, officials are faced with figures that can be off the mark by millions, billions or trillions of renminbi, meaning no one is entirely sure what's going on. (The government in Beijing has its own way of dealing with the problem: the incoming prime minister, Li Keqiang, once reportedly said financial data in China was "man-made" and he relied instead on three indicators: electricity consumption, rail cargo and bank loans.)
This week, Chinese media reported widely on China's "phantom province," the GDP excess that resulted when the economic growth figures from 31 provinces, municipalities and regions were added up and compared to the different, national GDP figure that the government uses. In 2012, the discrepancy reached a remarkable 5.76 trillion renminbi, its biggest ever and the equivalent of the output of Guangdong province, itself an economic powerhouse, the media said.
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