On January 23, the Chinese government locked down the city of Wuhan (Hubei Province). In subsequent days, similar measures were taken in other cities in Hubei and throughout China. This note offers some preliminary gauge on the effect of the measures taken to protect public health on economic activity in China. We will make use of three sources of data. First, there already is some official data on industrial output. Second, we make use of data on trucking flows to measure the flow of goods across China. Third, we use data from Baidu to estimate the effect on services and worker movements within China.
1月23日，中國政府為控制COVID-19新型冠狀病毒的傳播封鎖了湖北省武漢市。隨後幾天，湖北省其他城市、中國其他省市均相繼採取了封鎖措施。在此背景下，本文將利用三類資料：一是國家統計局所公佈的有關工業產出的官方資料，二是卡車運輸資料（可衡量中國的貨物運輸流動），三是百度人口流動資料（可估計封城對服務業和人口流動的影響），來初步估算量化中國政府為控制疫情保護公眾健康所採取的封城舉措對中國經濟的影響。
Chinese local governments wield their enormous political power and administrative capacity to provide “special deals” for favored private firms. We argue that China’s extraordinary economic growth comes from these special deals. Local political leaders do so because they derive personal benefits, either political or monetary, from providing special deals. Competition between local governments limits the predatory effects of special deals.
China’s national accounts are based on data collected by local governments. However, since local governments are rewarded for meeting growth and investment targets, they have an incentive to skew local statistics. China’s National Bureau of Statistics (NBS) adjusts the data provided by local governments to calculate GDP at the national level. The adjustments made by the NBS average 5% of GDP since the mid-2000s. On the production side, the discrepancy between local and aggregate GDP is entirely driven by the gap between local and national estimates of industrial output. On the expenditure side, the gap is in investment. Local statistics increasingly misrepresent the true numbers after 2008, but there was no corresponding change in the adjustment made by the NBS. Using publicly available data, we provide revised estimates of local and national GDP by re-estimating output of industrial, construction, wholesale and retail firms using data on value-added taxes. We also use several local economic indicators that are less likely to be manipulated by local governments to estimate local and aggregate GDP. The estimates also suggest that the adjustments by the NBS were insufficient after 2008. Relative to the official numbers, we estimate that GDP growth from 2008-2016 is 1.7 percentage points lower and the investment and savings rate in 2016 is 7 percentage points lower.
On January 23, the Chinese government locked down the city of Wuhan (Hubei Province). In subsequent days, similar measures were taken in other cities in Hubei and throughout China. This note offers some preliminary gauge on the effect of the measures taken to protect public health on economic activity in China. We will make use of three sources of data. First, there already is some official data on industrial output. Second, we make use of data on trucking flows to measure the flow of goods across China. Third, we use data from Baidu to estimate the effect on services and worker movements within China.
1月23日，中國政府為控制COVID-19新型冠狀病毒的傳播封鎖了湖北省武漢市。隨後幾天，湖北省其他城市、中國其他省市均相繼採取了封鎖措施。在此背景下，本文將利用三類資料：一是國家統計局所公佈的有關工業產出的官方資料，二是卡車運輸資料（可衡量中國的貨物運輸流動），三是百度人口流動資料（可估計封城對服務業和人口流動的影響），來初步估算量化中國政府為控制疫情保護公眾健康所採取的封城舉措對中國經濟的影響。
Chinese local governments wield their enormous political power and administrative capacity to provide “special deals” for favored private firms. We argue that China’s extraordinary economic growth comes from these special deals. Local political leaders do so because they derive personal benefits, either political or monetary, from providing special deals. Competition between local governments limits the predatory effects of special deals.
China’s national accounts are based on data collected by local governments. However, since local governments are rewarded for meeting growth and investment targets, they have an incentive to skew local statistics. China’s National Bureau of Statistics (NBS) adjusts the data provided by local governments to calculate GDP at the national level. The adjustments made by the NBS average 5% of GDP since the mid-2000s. On the production side, the discrepancy between local and aggregate GDP is entirely driven by the gap between local and national estimates of industrial output. On the expenditure side, the gap is in investment. Local statistics increasingly misrepresent the true numbers after 2008, but there was no corresponding change in the adjustment made by the NBS. Using publicly available data, we provide revised estimates of local and national GDP by re-estimating output of industrial, construction, wholesale and retail firms using data on value-added taxes. We also use several local economic indicators that are less likely to be manipulated by local governments to estimate local and aggregate GDP. The estimates also suggest that the adjustments by the NBS were insufficient after 2008. Relative to the official numbers, we estimate that GDP growth from 2008-2016 is 1.7 percentage points lower and the investment and savings rate in 2016 is 7 percentage points lower.
