Caixin
Sep 18, 2018 08:10 PM
ECONOMY

Five Regions Caught Telling Companies to Cook Their Books

Photo: VCG
Photo: VCG

China has been cracking down on data fabrication by local governments, naming cities in five provincial-level areas that helped about 200 enterprises report figures that turned out to be “seriously exaggerated.”

It was the latest central government move against the notorious practice of data manipulation as the central government begins to shift from focusing on quality growth instead of exclusively on high growth rates.

According to a statement issued by the National Bureau of Statistics (NBS) on Tuesday, staff members at local statistic bureaus were found to have instructed enterprises to fabricate statistics. In some cases, staff members filled in false information on behalf of the companies.

The named and shamed cities included Binhai New Area of Tianjin municipality, Kailu county of the Inner Mongolia autonomous region, Fengxian county of Liaoning province, Gaomi of Shandong, and Lingwu of the Ningxia Hui autonomous region.

In Tianjin’s Binhai, the enterprises asked to report false economic figures included some that had suspended their operations, the NBS statement said.

In Inner Mongolia’s Kailu county, where about 35 enterprises were found to have falsified data, local authorities offered rewards to companies that reported altered data. County officials were aware of the practice, but didn’t do anything to stop it or correct the phony figures.

A June report filed by the National People’s Congress, China’s legislature, showed that local enterprises in Tianjin’s Lingang inflated some pieces of data by 56 times.

The NBS announced it has issued punishment recommendations for those responsible, but did not say what the punishments would be. It only said the punishments would be announced later.

The bureau said it would also expose more misconduct by statistics officials in future.

As the central government increasingly targets official data fabrication, local governments have been dialing down their development figures to reflect reality.

In 2017, the government of Liaoning province in China’s northeastern rust belt admitted that it exaggerated fiscal revenues by around 20% from 2011 to 2014. It was the first province to confess to fudging data.

Earlier this year, Tianjin’s Binhai New Area, a district home to many modern manufacturing and logistics businesses, revised down its gross domestic product by 33.4%, or 330 billion yuan ($48 billion), after a crackdown on data inflation.

The NBS statement came after the State Council and Communist Party of China issued a regulation on Sunday detailing the establishment of a statistics inspection system at the provincial level.

The NBS inspection teams will target top leaders of provincial governments and party committees.

Contact reporter Wu Gang (gangwu@caixin.com)

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