While there are incentives for local officials to falsify the economic data, there is actually little real incentive for the central government to falsify the data. In fact, as the lesson of the Great Leap Forward illustrates, false data might actually lead to the wrong policy decisions. There is no evidence of a systematic falsification of data, either upwards or downwards, at the central government level, since economic reform began in China in 1978. There may be inaccuracies, omissions and fraudulent reporting (for example, over- or under-invoicing of exports or imports), but no intentional falsification of data.
Falsifying publicly distributed data provides the wrong signals to enterprises, households and governments of all levels. For people to think that the rate of growth is higher than it actually is – for example, thinking it is 8 per cent when it is actually 4 per cent – poses huge risks. The converse – thinking the rate of growth is lower than it is – is also risky. Acting on the wrong information can do enormous damage to the economy.
There is no benefit to China whatsoever to falsify the economic data. And the Chinese economy can easily survive a rate of growth lower than 6 per cent. Falsification of data risks not only confusing one’s enemies and competitors but also one’s allies, friends and colleagues.