Cablegate Chronicles: How to Really Measure Economic Growth, the Chinese Way

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A Chinese official explains how GDP numbers are 'for reference only.'

FROM: BEIJING, CHINA
TO: STATE DEPARTMENT
DATE: MARCH 15, 2007
CLASSIFICATION: CONFIDENTIAL
SEE FULL CABLE

The Economy: Not By the Numbers -------------------------------

¶3. (C) Describing some of the challenges he faces as Party Secretary, Li related that despite brisk economic growth of SIPDIS 12.8 percent in 2006, Liaoning's income gaps remain severe. Liaoning ranks among the top 10 Chinese provinces in terms of per capita GDP, yet the number of its urban residents on welfare is among the highest in the country and average urban disposable income is below the national average. By contrast, rural disposable incomes are above the national average. Even so, incomes for Liaoning farmers are only half that of urban residents.

¶4. (C) GDP figures are "man-made" and therefore unreliable, Li said. When evaluating Liaoning's economy, he focuses on three figures: 1) electricity consumption, which was up 10 percent in Liaoning last year; 2) volume of rail cargo, which is fairly accurate because fees are charged for each unit of weight; and 3) amount of loans disbursed, which also tends to be accurate given the interest fees charged. By looking at these three figures, Li said he can measure with relative accuracy the speed of economic growth. All other figures, especially GDP statistics, are "for reference only," he said smiling.


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