It's not the first time (and it won't be the last), but a recent nationwide audit found some local governments inflated revenue levels and raised debt illegally, once again crushing China's credibility on the global stage when it comes to economic performance.
As Bloomberg reports, ten cities, counties or districts in the Yunnan, Hunan and Jilin provinces, as well as the southwestern city of Chongqing, inflated fiscal revenues by 1.55 billion yuan ($234 million), the National Audit Office said in a statement on its website dated Dec. 8.
The inspection, which covered the third quarter, also found that five cities or counties in the Jiangxi, Shaanxi, Gansu, Hunan and Hainan provinces raised about 6.43 billion yuan in debts by violating rules, such as offering commitment letters.
The findings are a blow to China’s bid to rein in data fraud, which has been widespread in some of the poorer provinces where officials were incentivized to inflate the numbers as a way of advancing their careers.
Concern from investors wanting to be able to trust data out of the world’s second-largest economy led to the government trying to crack down on the practice, with President Xi Jinping saying in March that data fraud “must be throttled,” according to the state-run Xinhua News Agency.
While historically investors would rapidly shrug this news off and buy more stocks, with Chinese sovereign bond yields near their Maginot Line of 4.00%, losing credibility could be critical.
A new supervisory body was set up within China’s statistics office in April to bolster and ensure data authenticity and quality.
The country is also shifting to the latest United Nations-based statistical standard and using computers -- rather than local reports -- to calculate provincial gross domestic product, the chief economist said in September.