for an average of 8.3% of the total industrial value added. Such a small proportion precludes the NBS survey teams from effective checks on the rest of the statistics from the local statistical agencies.

Furthermore, data on industrial firms suffer from limited information disclosure, further undermining monitoring from the public. As of now, only the aggregate industrial value-added data are publicly available at the province and the prefecture level, and these data cannot even be decomposed into the one- or two-digit subsectors.<sup>17</sup> Indeed, the largest discrepancy between the total national value added and the sum of the corresponding provincial values is found in the industrial sector. Finally, neither the census nor other data of the NBS are capable of adequately adjusting these skewed statistics. For example, while the 2008 Benchmark Revisions following the census reduced the overall value-added discrepancy as well as discrepancies in the tertiary sector, the data adjustments only eliminated a small proportion of the discrepancy in the industrial sector.

# **2.2.2 Setting growth target**

Chinese governments at all levels make their economic plans in advance, setting key economic targets, including GDP growth rates, industry value added, fiscal revenues and expenditures. The drafting of plans involves a top-down process: In December, the Central Economic Working Conference, jointly held by the Central Committee of Communist Party and the State Council, reviews economic performance in the current year, and then sets the national growth target for the next year. Provincial and prefecture governments then set their own targets on the basis of the national targets, taking into account the local conditions (Lyu et al. 2018).<sup>18</sup> These annual plans are released in the government work reports, and presented in the local People’s Congress at the beginning of each year.

# **2.3 Evidence of manipulation at the subnational level**

The quality and credibility of China’s officially released economic data have been scrutinized despite the lack of direct evidence. In recent years, a growing number of Chinese local governments significantly adjusted their economic data. In 2017, the provincial governor of Liaoning province acknowledged having inflated fiscal revenue by 20% per year in 2011-14. In 2018, the government of Tianjin released a revised GDP figure of 2016 that had been adjusted downward by one-third of the previously published number, while Inner Mongolia has reduced the 2016 data of fiscal revenue and industrial output by 25% and 40% respectively.<sup>19</sup>

> 17 This stands in stark contrast to the tertiary sector, whose value-added data can be divided into six subsectors. 18 The targets set by the upper-level governments, which can serve an important function of transmitting superiors’ preferences on the relative importance of economic growth to subordinates, are taken quite seriously by the lower-level governments. This also results in the top-down amplification of GDP growth targets (Li et al. 2019). 19 Similar cases have been found in 10 cities and districts in Hunan, Yunnan and Jilin provinces as well as in Chongqing. For detailed reports and analyses, see https://www.ft.com/content/0361c1a4-bcfe-11e6-8b45b8b81dd5d080; https://asia.nikkei.com/Economy/Chinese-local-governments-rush-to-admit-fake-data, and

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