China’s Yunnan Province ‘Busted’ For Fake Data; Exaggerated 2013 Output By Over 150%

Chinese Province ‘Busted’ For Fake Data; Exaggerated 2013 Output By Over 150%

Tyler Durden on 09/05/2013 09:39 -0400

Still believe that China’s PMI is above 50 and suggesting a global growth expansion? Still believe in Santa and the Tooth Fairy? Well, none other than China’s own National Bureau of Statistics has been forced to admit that at least one of its major provinces has dramatically overstated industrial output. As Sina reports, according to a NBS report, the government in China’s Yunnan province had coerced local companies to report inflated industrial output value, resulting in artificially high economic figures. With government leadership promotions driven by the performance of economic numbers in each province, it should hardly be surprising but the scale of the fraud is remarkable. In 2012, one county in Yunnan province reported CNY6.34 billion in output while audits showed only CNY 2.82 billion and in the first half of 2013, Yunnan published CNY 2.75 billion in output while audits showed a mere CNY1.06 billion! The province was also found to have faked investment data.

Chinese county’s fake economic data exposed

2013-09-05 11:54:36 GMT2013-09-05 19:54:36(Beijing Time)  Xinhua English

BEIJING, Sept. 5 (Xinhua) — China’s National Bureau of Statistics (NBS) on Thursday announced it had uncovered a serious case involving the faking of economic data by a county government in southwest China’s Yunnan Province. According to the NBS’s publicized report, the government of Luliang had coerced local companies to report inflated industrial output value, resulting in artificially high economic figures. Twenty-eight sampled local companies reported a total of 6.34 billion yuan (1.03 billion U.S. dollars) in industrial output value in 2012; however, the actual value was only 2.82 billion yuan, based on initial calculation, according to the report. Similarly, 25 sampled local companies reported 2.74 billion yuan of industrial output value in the first half of 2013, but the NBS initially verified the actual value to be only 1.06 billion yuan. Meanwhile, the county was also found to have faked investment data. Companies complained that if they did not fraudulently report higher data, their reports would be returned by local government departments. They also said that fake reports would ensure they would enjoy favorable policies such as securing bank loans. The NBS said that the misconduct has seriously affected the authenticity and independence of company data. The NBS did not specify the reasons behind the county’s faking of data but it is a well-known fact that local government leaders are assessed for their performances based on economic data. Nice-looking data sheets mean promotion opportunities. In February 2012, the NBS launched a unified data collection system through which companies can send their data directly to the government’s statistics center or authorized provincial branches, in an effort to ensure the authenticity of official economic data and dispel discrepancies in this field. The scheme covers a total of 700,000 major enterprises, which contribute about 80 percent of the country’s GDP. However, many other small and medium-sized companies as well as individual businesses are not included.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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