How fast has Chinese industry grown?
Data for recent years indicate an acceleration of Chinese industrial growth, from the annual rates of about 10 percent recorded in the quarter century before economic reform to figures approaching 15 percent in the mid- and late 1980s. Evaluating the statistics underlying these reports requires an appraisal of how economic reform has affected the ability of China's statistical system to measure economic performance. Erroneous information about the rate and pattern of industrial growth could distort measures of productivity change considered to be central indicators of the effectiveness of Chinese industrial reform. The author describes the statistical materials and procedures used to provide information on the growth of industrial output. He investigates sources of bias in the official statistics to indicate, whenever possible, how these biases affected reported output totals, and to appraise the impact of adjustments to reported output growth on measures of industrial productivity. The specific consequences of decentralized decisionmaking, growing price flexibility, inflation, dual pricing systems, the emergence of enterpriseswith few or no ties to the system of state planning, and other emerging features of the industrial system may be unique to China but the broader issues raised are relevant in many countries. The author finds considerable evidence of an upward bias in measures of China's real industrial output in the past decade. The issue is not whether such bias exists but whether its presence substantially alters our perception of the rate and pattern of Chinese industrial growth. To clarify this issue requires investigating the extent of possible upward bias. This in turn calls for an analysis of possible links between upward bias - which is itself difficult to observe - and other economic patterns that may be more readily measurable.
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