Beijing Tackles Lack of Transparency Amid Global Financial Crisis

The agency that serves as China’s economic bellwether, the National Bureau of Statistics (NBS), has indicated that it will undertake new statistical reform and development. Ma Jiantang, the new NBS chief, stated that the financial turmoil facing the global economy “had increased the uncertainties of China’s macro-economic development and stability and set new tasks for statisticians.” In particular Ma said that he would “advance reforms and innovations in statistical systems, indices and methods to make sure statistical work could better serve the pursuit of scientific development” (Xinhua News Agency, October 5). Ma inherited from his predecessor, Xie Fuzhan, a dilapidated system whose proper functioning is now critical for not only Beijing’s economic planners but also for Western financial institutions trying to bail out or hedge the on-going global crisis in the financial market.

However, the current Chinese system remains “feeble,” both in terms of the statistical methods it employs as well as its management, which is subject to political pressure from both local and national leaders. According to the minutes of an NBS meeting obtained by the Chinese news media, Ma Jiantang urged NBS staff “to resist all fabrications of data, secure the quality of figures and work with professionalism” (Xinhua News Agency, October 5). Ma’s statement highlights the severity of an endemic problem in the data provided by local governments in China, and by extension the validity of its national economic forecast. Part of the problem is in how NBS’s local branches are managed: while the NBS assigns the projects to be carried out by its local arms, the local governments control personnel and finance. Thus, local officials eager to be promoted have been known to exert pressure on statisticians to inflate data of provinces, municipalities and autonomous regions in order to impress their superiors (Xinhua News Agency, October 5).

With the global financial market in flux China may be expected to play a more prominent role in restoring global financial stability. Western experts note that China’s financial system has been “relatively shielded from those problems” facing Western institutions (Beijing Review, October 6). According to a report by the China Central Television (CCTV), “Chinese banks had only invested 3.7 percent of their total wealth in overseas assets,” which are particular to developed markets that have undertaken substantial risks in complex financial transactions and products. Against the backdrop of the on-going domino effect from the U.S financial fall out to the European banking systems, Chinese Premier Wen Jiabao attempted to inject a voice of calm in these tumultuous times. In his remarks at the World Economic Forum on September 27, Wen said: “At the moment, confidence is more precious than gold,” while following up this statement by linking China’s growth to global stability, noting “stable and sustained growth is our most important contribution to the world economy” (Beijing Review, October 6). Even still, Chinese leaders are also beginning to recognize the limitations to that growth: “It is impossible for China, a country of 1.3 billion people, to follow the old model of the development countries by consuming large quantities of energy at the expense of the environment,” said Chinese Vice-Premier Wang Qishan (People’s Daily, October 6).