New Chinese Stats Boss Ning Jizhe Prepares to Take Numbers

When rising political star Li Keqiang talked privately with Clark Randt, former U.S. ambassador to China, back in 2007, the future Chinese premier reportedly admitted that he didn’t regard gross domestic product as an accurate gauge of his country’s economic growth. Electricity use and rail freight were better indicators, said Li, then Communist Party boss for northeastern Liaoning province.

The premier, who has criticized the way that China gathers and interprets economic data, suggesting that local officials might be fudging the numbers, recently named aide and confidante Ning Jizhe head of the National Bureau of Statistics. This move comes as China’s growth story faces mounting international skepticism: GDP expanded by 6.9 percent in 2015, the slowest rise in three decades, but some Wall Street investors believe the real rate is even lower.

Ning’s mission: Sharpen statistical methods and mitigate interference in data collection across China’s 34 provinces, special administrative regions and self-administered municipalities. Previously deputy chief of China’s National Development and Reform Commission, he spent many years as a senior researcher at the State Council Research Office and served as adviser to Li from 2013 to 2015. Ning’s predecessor at the statistics bureau, Wang Bao’an, was arrested after only ten months on the job for alleged corruption during his former role as a Finance vice minister.

Ning, 60, has a doctorate in economics from the prestigious Renmin University of China and is one of the few senior economists to hold the post, which in the past went to political appointees from the Ministry of Finance and the People’s Bank of China. At the State Council Research Office, he helped Premier Li to double-check statistics, sending teams to the provinces to ensure that the bureau was doing its job properly, according to sources who are familiar with him.

His appointment shows how serious Li is about improving data collection, says Shen Jianguang, Mizuho Securities Asia’s Hong Kong–based chief economist for the region.

In a recent report Shen explained that the growth statistics for various Chinese industrial sectors add up to less than the government’s GDP total. He also noted variance and inconsistencies in the numbers and the possibility that industrial value-added data was “inflated.” However, Shen refused to comment on the level of inaccuracy, saying only that “there are some data issues as in other countries.”

Investors have long questioned the reliability of Chinese GDP statistics, but some observers think the country is understating its economic expansion.

China’s data-gathering process mostly meets global standards, and charges of fabrication are “misinformed,” according to a 2015 study by New York–based research firm Rhodium Group. The survey, commissioned by Washington-headquartered think tank the Center for Strategic and International Studies, reported that China’s economy is larger than official figures show, with the service and real estate sectors underrepresented.

There’s anecdotal evidence that Beijing’s GDP math falls short by a long shot. An attorney with a major Chinese law firm based in Shanghai says he and his colleagues spend most of their time helping Chinese corporate clients to set up offshore accounts to escape taxes, which can be as high as 50 percent for individuals and 25 percent for companies.

“Tax mitigation is a core part of the corporate law practice of many Chinese law firms,” the attorney adds. Although there’s no official tally, some analysts believe that up to 30 percent of Chinese commercial activities are unaccounted for due to tax avoidance.

Mizuho’s Shen says Ning will push for changes that make Chinese GDP statistics more precise: “I think he will make a difference.” Just don’t count on China’s underground economy to show up in the numbers.