Top Statistician Qiu Xiaohua Surprisingly Dismissed

October 13, 2006 at 10:43 pm (China, Economics, Environment, Politics)

 

Qiu Xiaohua, Director and party chief of the National Bureau of Statistics, was surprisingly removed. A PhD in Economics, Qiu had been working at the statistic bureau for 24 years. Qiu is very outspoken and is considered a typical technocrat.

Xinhua’s report didn’t give any detailed reasons on his removal. Discussions from blogsphere disclosed at least three possible reasons:

1, Qiu might be implicated in Chen Liangyu scandal.

2, Qiu stubbornly deviated from central government’s macro economic policy by claiming investment and the whole economy are not overheating. China should put more emphasis on trade surplus and foreign exchange, Qiu said.

3, Despite heavy suspicions from the outside, Qiu insisted on the reliability of the statistics from his bureau.

Before the central government reveals more details, we will never know whether Qiu is a member of the Shanghai Gang which the new central leader insists to disband. There is nothing more we can talk about on reason one.

Qiu’s speeches on the macro economy are seen on Chinese newspapers. He is one of a few high-level officials disagreeing with the central government on the economic policies. In a news conference in September, Qiu said the growth speed of investment was slowing down, and it’s unnecessary to frame policies to curb the economy. This opinion is an outright opposition against the central government.

Also it’s not news that China’s statistics are widely doubted. For this Qiu should at least not be fully blamed, since false numbers have a long tradition in China. Under the communist rule, statistical default can at least date back to the Great Leap Forward Mao launched, when communist offcials were much more brazen to generate miraculous figures. The wrongdoing is derived from China’s whole bureaucratic system. I would rather believe Qiu had done his best to ensure the statistical authenticity. “Happy number” will not be annihilated until China stops evaluating local officials on economic performances. Further more, when was the last time a bureau chief said what his bureau had been doing was wrong?

Finally, one thing has to be mentioned is that Qiu is not enthusiastic on the Green GDP initiated by the Environment Protection Bureau, and allegedly supported by the central government.

A green GDP is good. And China urgently needs a green economy. But, I seriously doubt the “seriousness” of the central government.

First, the environment protection bureau almost has no influence on local governments, which are passionately promoting local economies by sacrificing the environment. In fact, I won’t believe any local officials will execute any orders from the environment bureau.

Pan Yue, the vice bureau chief, said in September that he was still not sure when the green GDP system will take effect. This is a solid proof that the bureau is not confident on their authority, or, the central government is far from ready to promote a green GDP.

By shying away from appealing for an impossible green GDP, Qiu at least proved he has a sober mind.

I would take a removal of a technical and outspoken offcial as another strong signal that the incumbent government is drifting away from economic and political freedom. Political strikes overweight working performaces. Central edicts kill alternative viewpoints. Even if the central government is correct on its judgment, it’s very dangerous to eliminate different ideas.

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Green GDP and China

October 2, 2006 at 8:39 pm (China, Economics, Environment)

GDP (Gross Domestic Product) as a leading economic statistic is obsolete and misleading, Nobel Economic laureate Joseph Stiglitz said in his Fortune magazine column.

Not the first one to champion the green GDP concept, Stiglitz’s advocacy adds more weight on the debate on sustainable development. An expert on economy globalization, Stiglitz voiced his concern from a global angle. Green GDP is particularly important to China, where the government is sacrificing the environment to bulwark a high-speed economy, which is treated as the premise of a stable society and the justification of the communist ruling.

Sensing the danger of the unsustainable development, conscientious economists and socialists have been appealing for a healthy economic growth. Even the central government realized the importance of an environment-friendly economy. The National Bureau of Environment Protection released China Green GDP Accounting Studying Report a month ago. The report said in 2004, pollution cost the nation 511.8 billion yuan, accounting to 3.05 percent of that year’s GDP. The pollution cost is nearly half of the GDP of Zhejiang Province, one of the richest provinces in China.

We all know that without considering the environment impact, GDP is composed of consumption, investment and net export. If we include “environment consumption” into the accounting of GDP, 511.8 billion will be deducted from 2004’s GDP, which is 13.65 trillion.

The central government is intent to establish a green GDP framework in the nation in 3 to 6 years. Considering the resistance from local officials, who routinely take local economy as the ground to higher level positions, let’s estimate the time to be at least 10 years. By that time, there might be nothing left for the country to squander.

As soon as the economy slows down, there will be more unemployment and more instability. This is what keeps the central officials awake at night. This also worries the rest of the world.

 

 

 

Good numbers gone bad

Why relying on GDP as a leading economic gauge can lead to poor decision-making.

By Joseph Stiglitz

 

(Fortune Magazine) — Gross domestic product, the leading economic measurement, is outdated and misleading.

Long the standard scorecard for any national economy, GDP has become deficient as a measure of long-term economic health in our resource-driven, globalizing world.

Think about it. It’s like grading a corporation based on one day’s cash flow and forgetting to depreciate assets and other costs.

In today’s business reality, where intangible assets have become increasingly important, cash flow can be a particularly bad indicator of a company’s value. A startup can have no cash flow and yet be creating a software program of immense value. A company with positive cash flow can be running itself into the ground as its capital depreciates. Economies are no different (more).

 

 

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