Up until 2005, China did not participate in the International Comparison Program (ICP). Similar to the consumer price index, the ICP collects cost data on an internationally comparable selection of goods and services as a way of establishing the international poverty line. In 2005, China participated in the ICP for the first time, but only in 11 major metropolitan areas, and only using a price survey implemented by China's National Bureau of Statistics.
Sound fishy? Yes, I think so too...
Enter the World Bank. In a policy paper released back in May of 2008, two analysts found a substantially larger number of Chinese people living below the international poverty line than the Chinese government had reported, even with the inherently biased data. Prior figures from China's National Bureau of Statistics put the 2005 poverty rate at around 70 million people, but the real number is between 135.4 million and 204.3 million people.
Even with the revisions, China has lifted an astounding number of people out of poverty. Between 1981 and 2005, the number of people living on less than $1.25 a day declined from 838.9 million to 204.3 million in terms of consumption poverty, and from 816.2 million to 135.4 million in terms of income poverty. By any measure, such a change is incredible.
But given such an extreme "rounding error," it turns out that China's economy was about 40 percent smaller in 2005 than previously claimed. And so you have to wonder about what the real level of GDP is in 2009. As Dr. Scissors has pointed out, "the only thing certain about these figures is that they are wrong."
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2 comments:
If Chinese wants to fool themselves with their own numbers, let them be.
That's one way to look at it. The other way is to recognize that self-reported numbers from the PRC work their way into all sort of interesting corners of the global economy. So we all have a vested interest in ensuring transparency.
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