By Abby Shamray
The anti-corruption commission of China’s Communist Party announced on January 26 that it was looking into the director of the National Bureau of Statistics for possible “serious violations.”
The investigation of the NBS comes at a time when confidence in China’s self-reporting of its economy is low among the international community. This recent action is a continuation of President Xi Jinping’s promise to investigate any possible corruption in the government, a move that has already toppled several top officials, according to The Diplomat.
Chinese state news agency Xinhua reported in December that several officials had admitted to inflating figures of growth. In 2012, the growth rate for Liaoning province was reported as 9.5 percent but had dropped to 2.7 percent in 2015.
Other regions are showing similar drops. One official explained their actions by saying, “If the past data had not been inflated, the current growth figures would not show such a precipitous fall.”
According to China’s official statistics, growth rates have slowed down in recent years, with the economy currently being the slowest it has been since 2009. Nonetheless, official records still show a steady 7 percent annual growth rate. Some analysts estimate that the pace may be as little as half the official figures, according to The New York Times.
The Conference Board’s Global Economic Outlook for 2015 decided against using official statistics. Instead, the organization used a model by Harry Wu that shows much more volatility than the consistent official figures indicate, according to Bloomberg Business. The official estimate for 2015 was 6.9 percent, but the Wu model calculates it to be around 4 percent. Analysts such as Wu take into account the difference between China’s commodity usage, which often does not align with the reported growth.
Wu’s model indicates that China may have already reached the end of its period of rapid growth. According to The New York Times, an industrial slowdown for China poses a large risk for the global economy. A larger concern for investors is not the slowdown itself but rather the government response to it.
“People see the weakness in China and in the overall equity market and think there’s going to be an impact on corporations here in the United States,” Reuters quotes Robert Pavlik, chief market strategist at Boston Private Wealth in New York.
The doubt that has long existed regarding their economic figures has had a negative impact on how the Chinese economy is viewed globally. The market suggests that the renminbi, the Chinese currency, is overvalued because of the country’s current debt burden and slow economic growth.
Chinese officials have continued to state that the renminbi is not overvalued and have taken actions in order to ensure that the exchange rate remains favorable. Despite their assertions, many countries have called for a regulatory response to the questionable official figures. Some members of the United States Congress, specifically Senator Rob Portman (R-Ohio), have championed for the Treasury Department to declare the renminbi a manipulator and issue sanctions.