Trump is undermining trust in official economic statistics. China shows where this road can lead
Welcome back! Louise is here. On Friday, President Trump fired one of the top U.S. economists after her institution released a disappointing job report. Trump claims the numbers are “manipulated,” but there is no evidence that Erika McEntarfer or the Bureau of Labor Statistics (BLS) has done anything wrong. However, new employment data suggest that Trump’s policies have had a negative impact on the U.S. economy.
Republicans have piled up in the days since, unfoundedly accusing McEntarfer of publishing “fake reports.” Trump has not appointed a new BLS commissioner yet, but the legend has made some Americans question whether government statistics can be trusted. If you want to get a glimpse of that place, look at China.
The Chinese government has long been accused of exaggerating its annual GDP growth figures, especially at the provincial level. In 2007, the former Chinese prime minister told the U.S. ambassador to China that his province’s GDP figures were “artificial.” To understand the situation in his area, Li Keqiang said he tracked electricity consumption, freight volume and bank loans, a system that economists later called the “Li Keqiang Index.”
15 years later, experts say things have changed a lot. The Chinese government has now released more economic data, which is generally considered more reliable. “The data has improved greatly over time as time goes by,” said Nicholas R. Lardy, a senior fellow at the Peterson School of International Economics.
One reason for this is that Beijing has stopped rating local officials based primarily on the economic performance of its region. The way of thinking of all outcomes leads to social problems such as widespread pollution. In response, the Communist Party of China began to pay more attention to subtle ideals, such as promoting innovation and reducing urban-rural divides. This, in turn, reduces the motivation to manipulate GDP figures in the first place.
However, many analysts believe that Beijing continues to deceive its overall growth, partly because officials remain deeply concerned about the forecasted economic image. China formally reported that its economy grew by 5% in 2024, while the U.S. economic growth was only 2.8%.
At a December meeting, an economist at a Chinese state-owned investment company said that “we don’t know” the real growth figures in China, but he speculated that this is much lower than the report. When Xi Jinping made comments, he was reportedly angry and ordered economists to be punished. Does it sound familiar?
In recent years, as China’s economy calms down, officials have repeatedly sought to share negative information at the gun or dared to question Beijing’s experts. Government departments have stopped issuing some industrial reports and employment indicators, or have temporarily postponed releases without explanation. Other data becomes more difficult to interpret or can no longer be accessed from abroad.
But, like many things in China, two seemingly contradictory things can be right immediately. Although the experts I talk about admit that China is far less transparent than the United States, they say the information it provides is now relatively accurate and often surprising.
