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China GDP not fake, Xinhua says, after unusually steady growth rates

An investor looks at Stock index quotes at a brokerage firm in Shanghai.
On Man Kevin Lee | Getty Images
An investor looks at Stock index quotes at a brokerage firm in Shanghai.

Remarkably steady growth rates for three straight quarters have raised suspicions about "data smoothing" in China, but the country doesn't need to do that, a commentary in state-owned Xinhua news agency says.

"The reality is that the government simply has no incentive or necessity to whitewash the real economic picture," writer Zhang Zhongkai wrote.

The opinion piece acknowledged that it was "routine" for observers to view economic data from the world's second-largest economy with askance.

"However, it would not be much of a whitewash by the statistics bureau to indulge in fabrication as such moves would inevitably draw widespread skepticism," wrote Zhang.

The article came on the heels of China's third-quarter GDP release on October 19, which showed the economy grew at 6.7 percent, as it had for the two previous quarters, prompting economists to voice skepticism about China's ability to sustain such stable growth rates even amid an economic transition.

"It suggests quite significant smoothing of the data behind the scenes. Even by Chinese standards, this is quite rare," Capital Economics' Julian Evans-Pritchard said.

It was not a new accusation; influential economist Willem Buiter of Citigroup has repeatedly accused China of overstating its real growth rate, saying in September 2015 that other data showed that China's real GDP growth in 2015 was 4 percent or less, not the 6.9 percent claimed by Beijing.

Xinhua's writer admitted there were instances when provincial governments in China had faked statistics.

"Provinces in northeast China were found doctoring GDP data during an anti-corruption probe late last year," Zhang wrote.

But he noted that China had adopted International Monetary Fund standards for its data, and national statisticians collected independent provincial data to ensure the accuracy of numbers.

Thus, the steady quarterly GDP performance over three quarters was "clearly a coincidence," although the fact that China's economy was stabilizing "is of no surprise at all," Zhang wrote.

China did not need to "play the numbers game" as the government had ample policy tools to keep the economy within the 6.5 to 7 percent growth range, he added.

"Smoothing the data might seem the easiest way to an end, but the government well knows that it would be an act of self-delusion that could easily derail structural reforms and hurt economic growth in the long run," Zhang wrote.

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