China Center Quick Take: Implications of the Official Report on Faked Economic Data

For companies that operate in China, the Xinhua News Agency's December 11 revelation that provincial officials had “faked economic data” is not surprising and should not be overly concerning or distracting. The Conference Board China Center has found that while overreporting as a tool of policy support is on the decline, "not reporting” is clearly on the rise. Our revised GDP estimates for China indicate that China will likely continue to add hugely to nominal growth over the next 10 years and thus remain opportune for MNCs from a growth perspective.

Increasing city-level growth disparity is, however, an important new reality. Market selection will be a critical success factor in the future (see our new “city strata framework”). Executives will need to regularly survey the city-level front lines and step up city-specific market assessments to accurately understand emergent demand and risk dynamics (in particular, debt and liquidity risks in city-level supply chains).