# I. INMODUCnON

Data for recent years indicate an acceleration of Chinese<sup>iwdustrial growth from the annual</sup> rates of approximately ten percent recorded during the quarter-century<sup>prior to the introductiun</sup> of economic reform policies to figures approaching 15 percent<sup>annual growth during the mid-</sup> and late 1980s. Evaluation of the statistical materials<sup>underlying these reports requires an</sup> appraisal of how economic reform has affected the capacity<sup>of China's statistical system to</sup> measure economic performance. Since industrial output dominates<sup>China's national income</sup> totals, possible inaccuracies in statistics of industrial growth<sup>have the potential to affect overall</sup> measures of the size and structure of China's economy u well<sup>as perceptions about the size,</sup> structure and growth rate of the industial sector itself. Of particular<sup>concern is the possibility</sup> that erroneous information about the rate and pattern of<sup>industrial growth will distort measures</sup> of productivity change, that we regard as central indicators<sup>of the effectiveness of industrial</sup> reform efforts in China's economy.

The objective of this paper is to describe the statistical<sup>materials and procedures that stand</sup> behind published information on the growth of industrial output,<sup>to investigate sources of bias</sup> in the official statistics, to indicate, whenever possible, the<sup>quantitative impact of these biases</sup> on repcrted output totals, and to appraise the impact<sup>of adjustments to reported output growth</sup> on measures of industral productivity..

The problems explored in this paper arise primarily<sup>from thea interaction between the</sup> growing complexity of industrial organization and market<sup>structure and a statistical network</sup> designed to collect information ior the pre-reform system<sup>of industrial olanning and</sup> administration. Although the specific consequences of decentalized<sup>decision-making, growing</sup> price flexibility, inflation, dual pricing systems, emergence<sup>of enterprises with few or no ties</sup> to the system of state planning, and other emergent features<sup>of the industrial system may be</sup> unique to China, the broader issues raised by these developments<sup>would seem applicable to other</sup> socialist economies at various stages of maiket-oriented reform<sup>programs.</sup>

# **II.** CONCErr **A CATEORE FOR CNSE INDUSRIAL STsTIMMCS**

Manipulation and interpretation of data portaining to<sup>Chinese industry (which includes</sup> mining, manufacturing and utilities) requires an appreciation<sup>of important concepts and data</sup> categories used by Chinese statisticians. State enterprises (puanmin<sup>suoyouzhif are those in</sup> which the legal ownership of post-tax profits resides<sup>in the hands of some level of the</sup> government. Nearly all of China's largest enterprises<sup>belong to this category, which accounted</sup> for 83.2 percent cif indL -ial output in 1978 and 59.7 percent<sup>in 1987 [Industry 1949-84, p. 98</sup> ;TJNJ 1988, p. 311]. L.ollecti.-e enterprises (iiti suoyouzhi<sup>are those in which this residuai</sup> ownership right resides with the ente-"ise itself. Residual<sup>profit of private or individual (gc)</sup> enterprise accrues to thcz owners.

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