China's desperation to achieve an economic growth of above 6.0 per cent in 2019 and 2020 could see the government turn to a wide-reaching census that could give it the numerical ammunition it needs to "smooth over" annual data and boost the growth path that would otherwise miss the mark, some analysts believe.
China has a grand aim of creating a "moderately prosperous society" by next year, the cornerstones of which are a doubling of national gross domestic product (GDP) and per capita income in 2020 compared to 2010.
As it stands, that would require achieving economic growth of 6.2 per cent per year, said Ding Shuang, chief Greater China economist at Standard Chartered Bank.
Unless there is drastic modification in the upcoming economic census, China has to maintain an average growth of 6.2 per cent (this year and next year) to achieve the goal (of doubling GDP)Ding Shuang
But this is viewed by many as unlikely, with most private forecasters and international organisations predicting that growth will dip below 6.0 per cent next year, with the World Bank and International Monetary Fund forecasts of 5.9 per cent and 5.8 per cent falling within that range.
But Ding predicts that Beijing will find a way to push growth above 6.0 per cent, as "it is impossible for the central government to give up this goal (to double GDP) as they have to deliver this economic achievement in 2020".
This will be a challenge, since the quarterly GDP growth rate has slowed substantially from its peak of 12.2 per cent at the start of 2010 to only 6.0 per cent in the third quarter of 2019, the lowest quarterly growth rate since records began in March 1992.
"Unless there is drastic modification in the upcoming economic census, China has to maintain an average growth of 6.2 per cent (this year and next year) to achieve the goal (of doubling GDP)," Ding said.
The solution for policymakers may come in China's fourth economic census conducted this year but reflecting data from 2018, the results of which could be released by the end of the year, following previous editions in 2004, 2008 and 2013.
The census covers all businesses involved in the country's secondary and tertiary industries, in fields such as mining, manufacturing, electricity, building, wholesale and retail, transport, financing and real estate.
Over three stages, which this year were completed by August 15, it collects data from local survey agencies, reviews it and has a "superior census agency" audit it. The census pools deep wells of data relating to businesses' basic economic health, organisational structures, staff expenses, production capacity, financial status, and services, according to the State Council.
"The economic census involves the smoothing of the original data. Even if they don't falsify the original data, they can still change the statistical methods," said Dan Wang, an analyst at the Economist Intelligence Unit, adding that the authorities have in the past changed research and development expenditure quite often to "smooth the data".
After each of the previous three census rounds, the National Bureau of Statistics said they had modified the total GDP, with the level in 2004, 2008 and 2013 increased by 16.8 per cent, 4.4 per cent, and 3.4 per cent, respectively.
I don't see a great economic picture. The government will sneak through at above 6 per cent this year,Arthur Kroeber
The current census process has already been marred by accusations that local governments are massaging data to fit local political objectives. Four cases of falsifying economic census data have been reported in counties and cities in Sichuan, Yunnan, and Jilin provinces this year, according to the National Bureau of Statistics, with local authorities keen to paint a rosier picture of economic health, despite widespread recognition that their economies are struggling.
But even if the country's growth path is raised to meet the goal of doubling GDP and per capita income, it will not change the economic outlook amid the trade war with the United States, analysts said.
"I don't see a great economic picture," said Arthur Kroeber, founding partner of Gavekal Dragonomics. "The government will sneak through at above 6 per cent this year," he added, acknowledging that many will not "believe" the official data.
Meanwhile, Yu Yongding, a prominent economist and a former adviser to the People's Bank of China, urged the country to take firmer action to halt the current "abnormal" slowdown of its economy.
The long-term continuous slowdown is abnormal. The Chinese economy is not on the brink of a crisis yet, but the top policymakers must take measures to curb the slowdown and maintain (growth) above 6 per cent next yearYu Yongding
"The long-term continuous slowdown is abnormal. The Chinese economy is not on the brink of a crisis yet, but the top policymakers must take measures to curb the slowdown and maintain (growth) above 6 per cent next year," he said.
The implementation of a more expansionary fiscal policy, which would involve lowering taxes and increasing government expenditures further, has been promoted by some economists, including Yu, over the past few years as a solution to rein in the slowdown, especially amid the trade war with the US.
Premier Li Keqiang announced cuts in business taxes and fees worth nearly 2 trillion yuan (US$285 billion) in March to boost the economy, but the incentives have not yet stopped the slowdown due to weak business confidence, meaning switching the focus to government expenditures could be the next step.
Lu Ting, chief China economist at Japanese bank Nomura, said the Chinese government generally relies on infrastructure construction, the property sector and the car industry to boost short-term growth, and that there is some room for an expansion of fiscal policy to aid the process.
"Expansionary fiscal policy will inevitably lead local governments to borrow more from the central government, which will in turn make it more difficult for non-government financing. We have to be aware of the costs," he said, adding that easing restrictions on the real estate could be another option for the government to explore.
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