Unified accounting key to higher quality growth

According to the National Bureau of Statistics all the preparatory work has been completed and it will start to calculate the gross domestic product of local governments from next year. Beijing Youth Daily comments:

If the reform is well implemented, it will wring out some of the water from the local GDP data to make the figures more reliable. The reform will break the original "data islands", and ensure the national data can more objectively and accurately reflect the economic scale, structure and development speed of the country and regions, and so help the central government effectively judge the macroeconomic situation.

The move, which has had to overcome considerable resistance from local governments, symbolizes a substantial step forward in the sensitive reforms balancing the relations between the central and local governments.

In the past few years, several provincial-level governments, including the governments of Liaoning province, and the Inner Mongolia autonomous region, have admitted, for various reasons, that some city and county governments affiliated to them had doctored their statistics related to GDP calculation, resulting in a big gap between the data and the reality.

Since a high growth rate is invariably interpreted as testimony to the good performance of local governments, and there is no effective oversight mechanism forcing the local governments to be honest with their statistics, local governments have both incentive and opportunity to falsify their GDP data.

That explains why there has always been a discernable gap between the central government's estimate of the national GDP and the total GDP reported by the provincial governments.

The problem with the reform is that the NBS will still need to rely on the statistics reported by local governments to calculate their GDP, and if the provincial statistics offices cannot prevent the original data provided by the grassroots county and township governments from being falsified, the GDP the NBS calculates will still be miles away from the truth.

This calls for provincial-level statistics offices which are responsible for collecting the local economic data to do a good job, so the implementation of the unified accounting of regional GDP can improve the credibility of government statistics and help promote sustainable and high-quality economic development.