China's Economic Data Faces Scrutiny as Reliability Concerns Grow

China’s economic data has long been criticized for being unreliable and subject to political influence, raising concerns among economists and investors who increasingly rely on alternative indicators to gauge the economy’s health. These concerns have gained renewed attention following U.S. President Donald Trump’s removal of the Bureau of Labor Statistics’ (BLS) top official after a weak jobs report, drawing comparisons to how statistical manipulation in China has impacted decision-making and economic confidence.

According to the National Bureau of Statistics, China’s economy grew by 5% in the previous year. However, independent estimates vary widely, with some, like those from Goldman Sachs and Citigroup, aligning with the official figure, while others, such as the 2.8% GDP growth calculated by the Rhodium Group, are significantly lower [1]. The discrepancies highlight the challenges of measuring economic activity in a large and complex economy like China.

Issues with statistical transparency have been further underscored by abrupt changes in data reporting. For instance, after youth unemployment surged to 21.3% in 2023, the statistics bureau stopped publishing the data, citing a need to adjust the methodology. When the data was later reintroduced, it showed a lower rate of just under 18%, after excluding students from the calculation [1]. Derek Scissors, a senior fellow at the American Enterprise Institute, notes that the Chinese government is “intolerant of economic instability,” often smoothing data to reflect a more favorable economic narrative [1].

China’s approach to data collection also reflects its legacy as a centrally planned economy. Christopher Beddor, deputy China research director at Gavekal, points out that the country’s statistical methods lag behind international standards, particularly in areas such as services and household consumption [1]. Scissors adds that many transactions in state-owned enterprises are conducted on a “non-market” basis, making it difficult to assess true economic performance [1].

Moreover, incentives for manipulating data persist. Local officials may overreport to gain promotions, while businesses underreport to avoid taxes, as Dan Wang from the Eurasia Group explains [1]. This problem has worsened amid the recent economic slowdown. In response, China has approved legislation aimed at holding local governments accountable for statistical fraud [1].

The lack of trust in official data has led to a rise in alternative measures. The “Li Keqiang index,” developed by The Economist, tracks railway cargo volume, electricity consumption, and bank loans to provide an independent gauge of economic activity [1]. Alicia Garcia-Herrero, chief Asia-Pacific economist at Natixis, previously relied on electricity data but now considers other metrics such as sales of consumer durables and luxury goods as better indicators of consumption [1].

Beddor suggests that investors and analysts should examine multiple data series to form a coherent picture of economic trends. Cross-checking with external sources, such as trade statistics, and consulting insights from the private sector can also help mitigate the risks of relying solely on official numbers [1].

Wang argues that even manipulated data can serve as a useful signal of government intentions. Overreporting GDP growth, for example, may signal anticipated policy support to meet targets, she says. In a non-market-driven economy like China, policy signals are often more critical than hard economic numbers [1].

The implications of unreliable economic data extend beyond China. If U.S. economic statistics, long regarded as the global benchmark, were to lose credibility, it could reduce business confidence and deter major investments, according to Scissors. This mirrors the experience in China, where both domestic and foreign companies delayed investments due to skepticism about official figures [1].

Despite recent optimism driven by government stimulus and AI developments, China’s economy continues to struggle. Retail sales in July fell below expectations, and industrial production rose at its slowest rate since November, at 5.7% [1]. HSBC economists predict that additional policy support will be necessary to stabilize growth in the second half of the year [1].

Source: [1] China’s economic data is famously unreliable—and could be a warning if Trump meddles with the Bureau of Labor Statistics (https://fortune.com/asia/2025/08/22/china-economic-data-trump-bls-gdp/)