Why doesn’t the sum equal the parts in China’s provincial statistics?

By Nicole Goodman & Danyi Yang

The credibility of China’s economic data has long been a controversial topic for economists, especially as it pertains to the discrepancies between national numbers and provincial statistics. For example, the official Gross Domestic Product published by the National Bureau of Statistics in 2013 claims the economy was valued at 56.88 trillion yuan, while the sum of Gross Regional Product numbers collected at the provincial level added up to 62.9 trillion yuan, a 10.6 percent difference.

The gap primarily results from local officials who exaggerate growth rates to gain promotions and to secure additional funding from the central government.


Sources: Frontier Strategy Group analysis; National Bureau of Statistics of China

To remove the bias in the provincial statistics, FSG created a proprietary methodology to mitigate the overstatement of provincial data. Because we have data for both China and China’s provinces, we can measure the amount of error, which is then removed to ensure the provincial growth is equal to the growth of China as a whole.

Because China is such a critical component of every multinational corporation’s portfolio, accurate sub-national data is crucial to our clients’ success. Inflated provincial data made it difficult to compare provinces against each other and against other countries. The result was questions about market sizing and prioritization, leading to uncertainty during the strategic planning process. With FSG’s new sub-national data methodology, clients will be able set more accurate targets and benchmark growth rates against other provinces and countries. Our provincial forecasts are updated monthly to support ongoing strategic planning processes, timely target-setting, and customized predictive analytics.

In line with our new sub-national data for China, FSG developed a comprehensive city cluster-based approach for our clients to implement their go-to-market strategies. Beginning in April, FSG will update our view on China’s eight major city clusters in our Monthly Market Monitor reports.

FSG is committed to continual expansion of FrontierData. Over the next couple of months, we will utilize our sub-national data methodology to bring clients similar datasets and forecasts for states in Brazil and India.

To learn more about FSG’s China Provincial Data capabilities, FSG clients can contact their client relationship director. Not a client? Contact us here to learn more.

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