This article from Marketwatch touches on some of the distortions in economic data coming out of China's economy. Clearly the Chinese economy is growing and growing at much faster rates than the US, but it is hard to know exactly how rapidly. Some people do not trust official data at all and think they can get a better view of China's GDP growth rates by plotting the change in electricity usage instead of GDP (electricity growth has historically correlated very strongly with GDP growth).
Twin views of China's economic growth don't quite add up
The chasm between the two sets of numbers underscores the tendency of regional officials to file data that paint an overly rosy picture of the pace of growth.
The gap between the national and local figures ballooned to 1.4 trillion yuan ($205 billion) for the six months through June, according to the China Daily, which cited figures reported by the Beijing Times.
The size of the economy in the first half, according to figures provided by local governments, totaled 15.38 trillion yuan, while the National Bureau of Statistics reported a figure of 13.99 trillion yuan.
Mainland Chinese media reports said the discrepancy may be related to the tendency of local governments to double count the economic value of subsidiaries of large companies.
The error, according to reports citing Ye Qing, a professor with Zhongnan University of Economics and Law and a deputy chief of the Hubei Bureau of Statistics, arises when local governments count income from company branches along with the income figures reported by company headquarters. Often these company headquarters' figures already incorporate branch-level income.
Another explanation put forward is that regional government officials deliberately inflate the figures to exaggerate achievement in economic development. Often, officials' performance appraisals are related to how well the economy is doing.
Economists say the two sets of figures have failed to add up for the past five or six years.
Ma Jiantang, head of the Statistics Bureau, was cited in Chinese media reports last month as saying his agency was aware of the discrepancy and had proposed the central government directly calculate provincial GDP instead of relying on figures provided by regional officials.
Economists who monitor China generally disregard the regionally reported GDP figures and look instead at local export and import data, power generation data and other quantifiable statistics when trying to gain insight into the nation's regional economies, Credit Suisse's Dong Tao was cited as saying Tuesday in a South China Morning Post report.
