The Chinese way to measure growth

13 Ene The Chinese way to measure growth

By Doris Obermair

When you’re in China, you’ll soon find out that it’s hard to get accurate data on anything. I remember asking one of my friends there on the performance indicators of their internet activities. She furiously told me «there’s no real reliable source, our department relies on non-accurate data….». I switched the subject and shut up in disbelief.

The doubts about China’s statistical accuracy are growing and opendly questioned by experts. The BBC Beijing corresponent Louisa Lim urged caution when dealing with data compiled by the Chinese government. «Some sceptical economists point out that China has a long tradition of  massaging statistics for political motives,» she said in an article on «China climing the world economic table» 3 weeks ago. Accoring to official reports by the Chinese government its economy has grown by more than 18% than expected earlier this year, putting puts China into sixth place in terms of economic size, ahead of Italy and close behind the UK and France.

The situation is a result of decade-long top down «quota fulfilment preassure» (from central government down to local administration spheres) and have lead to dubious methods of data compilation, interpretation and inflated results.

Now the central cabinet has decided to place all statistical survey teams under the direct management of Beijing’s National Bureau of Statistics reports CNN today, quoting the newspaper Economic Daily. The reforms would «help strengthen the authority of the central government’s statistics, guarantee the trustfulness of statistics and improve the quality of national accounting», official sources said.

But it’s not only about data compliation, also about interpretation when talking about the booming Chinese economy: In his exhaustive analyse in Business Week, Bruce Einhorn deliberates over why China could become the world’s No. 1 exporter of tech gears. Mid-december the OECD announced that China had surpassed the US; figures that added fuel to the hot issue of how China measures its economic growth rates and how the rest of the world should interprete what the Chinese publish.

First of all he questions if all of those high-tech exports (by companies like Lenovo, Huawei Technologies or ZTE) are really Chinese: the answer is that some 60% of all exports come from foreign-invested enterprises and the higher you go up the ladder, the higher gets the proportion of foreign players. Today, Taiwanese companies such as Quanta Computer and Compal Electronics are still leaders in notebooks, but all have moved their production to low-cost mainland factories near Shanghai and Hong Kong. The same holds true for computer- and phone-makers from the U.S.; DELL produces PCs at a factory in the southeastern city of Xiamen not only for China but also for export to Japan.

And what about management, who’s behind the Chinese tech success stories? In smaller companies in booming sectors (chip design, e-commerce) the entrepreneurs are Chinese who have studied in the West and returned home (Some 7.5% of the PhD degrees in science and tech in the U.S. are awarded to Chinese citizens. Today, about 25% of the Chinese return up from 15% a few years ago).

So far Chinese tech brands haven’t been able to leverage their domestic brands success abroad; in the mobile phone market Chinese brands like Ningbo Bird and TCL have struggled abroad while Nokia and Motorola once again top sales.

Another reason China ranks at the top of the tech-exporter list is that the OECD doesn’t include software in its calculations. Throw that into the mix and China falls, because the mainland has no software companies that can compare to hardware powers such as Lenovo and Huawei. Piracy rates of about 90% make the rest and leaving software companies without the kind of money they need to grow into global powers.