Department of Economics
Esther Lee Building
Chinese University of Hong Kong
Institutional Affiliation: Chinese University of Hong Kong
NBER Working Papers and Publications
|April 2019||A Forensic Examination of China's National Accounts|
with Xilu Chen, Chang-Tai Hsieh, Zheng Song: w25754
China’s national accounts are based on data collected by local governments. However, since local governments are rewarded for meeting growth and investment targets, they have an incentive to skew local statistics. China’s National Bureau of Statistics (NBS) adjusts the data provided by local governments to calculate GDP at the national level. The adjustments made by the NBS average 5% of GDP since the mid-2000s. On the production side, the discrepancy between local and aggregate GDP is entirely driven by the gap between local and national estimates of industrial output. On the expenditure side, the gap is in investment. Local statistics increasingly misrepresent the true numbers after 2008, but there was no corresponding change in the adjustment made by the NBS. Using publicly avail...