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The Reliability of Industrial Output Data in Communist China

  • Kang Chao

Extract

Western economists who wish to study economic conditions in Communist China are plagued both by the quantity and the quality of economic statistics made available by the Chinese Communist authorities. Quantitatively, the meagerness of statistical data makes the task of serious research difficult. Qualitatively, most Western economists have little confidence in these statistics as reliable representations of the actual situations. This paper will examine the general reliability of the physical output data of industrial commodities published by the Chinese Communist authorities. Industrial output data have been selected for our purpose for two reasons. First, great emphasis has been given to industrial production in the economic plans. Second, the Chinese Communist authorities have released relatively abundant data concerning industrial production so that it is possible to conduct certain empirical tests, as will be seen later, to determine the general reliability of the output figures for certain commodities.

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1 See the report of Hsueh Mu-chiao, former director of the State Statistical Bureau of the Central Government of Communist China, at the Fourth National Statistical Conference, as published in Tang Chi Kung Tso Tung Hsun (Statistical Bulletin), 1955, No. 5, pp. 17.

2 Chi-yun, Chia, “Conditions of the Statistical Work in 1954 and Opinions on the Statistical Work in 1955,” Hsin Hua Yueh Pao (New China Monthly), 1955, No. 4, p. 149.

3 State Statistical Bureau, “Instructions about the National Statistical Work in 1956,” Hsin Hua Pan Yueh Kan (New China Semi-Monthly), 1956, No. 8, p. 25.

4 Hsueh Mu-chiao's report at the Sixth National Statistical Conference, Tung Chi Kung Tso (Statistical Work), 1957, No. 2i, pp. 121.

5 See, for instance, Chi Hsieh Kung Yeh (Machinery Industry), 1955, No. 1, p. 15 and Hsin Hua Yueh Pao, 1955, No. 2, p. 129.

6 For example, it is much easier and safer to embellish the gross value of production, which was another important “indicator” of the achievements of any enterprise. In fact, the statistical authorities in Communist China had learned from their own experience about the disadvantages of gross value of production and some other “indicators.” Beginning in 1958, the twelve “mandatory indicators” that all industrial enterprises were previously required to report periodically were reduced to four, of which physical output is one.

7 There are three types of planned distribution of goods: (1) distribution by the central government, (2) distribution by various industrial ministries, and (3) distribution by local governments. About half of the producer goods output, in terms of 1955 gross value of production, is subject to the first type of distribution. See Keng-hsin, Li, “Discussion on the Ways of Distributing Producer Goods in Our Country,” Chi Hua Ching Chi (Planned Economy), 1957, No. 8, pp. 1822; and “Conference on the Distribution and Pricing of Industrial Goods,” Ching Chi yen Chiu (Economic Research), 1959, No. 2, pp. 34–6.

8 For fuller discussions of the distribution system in Communist China, see Kuang, Chi, “Inquiry on the Problems Concerning the Distribution Organizations of Producer Goods in Our Country,” Chi Hua Ching Chi, 1958, No. 1, pp. 2730, and Li Keng-hsin, op. cit.

9 Cases of returning defective merchandise to original producers are numerous and the returned goods are often in large amounts. For instance, the ratio of returned defective products to total sales of Shen-Yang High Pressure Switch Regulator Factory in 1955 was 50% [see Jen Min Jih Pao, (People's Daily), 04 8, 1956]; one-third of the locomotives sold by Dairen Locomotive Manufacturing Plant during the first quarter of 1956 were returned to the plant (see Jen Min Jih Pao, 12 2, 1956).

10 Chi Hsieh Kung Yeh (Machinery Industry), 1955, No. 1, pp. 810.

11 There are even one-man factories in some communes. See Chun, Yen, “My Opinion on Several Statistical Problems Concerning the Newly Formed Industries,” Tung Chi Yen Chiu (Statistical Research), 1958, No. 6, p. 39; and An Yu-shu and others, “Several Problems of Statistical Methods in the Industries Managed by Agricultural Cooperatives,” Tung Chi Yen Chiu, 1958, No. 8, pp. 2630.

13 According to a sample survey made in April 1959, 70% of the products made by commune industries were consumed by the producing communes. See Cho-hsin, Ku, “Development of Industrial Construction Planning in the Past Ten Years,” Chia Hua Yu Tung Chi (Planning and Statistics), 1959, No. 13, p. 15.

14 See Chun, Yen, op. cit., and Tung Chi Kung Tso, 1958, No. 23, p. 21. Another reason why some commune industries have not kept production records is that they do not have measuring instruments such as large scales. See Chi-ying, Chen. “Introducing a Method of Keeping Original Production Records for Indigenous Steel,” Tung Chi Kung Tso, 1958, No. 3, p. 26, and Statistical Bureau of Szechuan Province, “On the Statistical Work for the ‘Small Indigenous Group’ of Steel and Iron Production,” Chi Hua Yu Tung Chi, 1959, No. 1, p. 31.

15 Chieh, Teng, A Preliminary Evaluation of the Socialist Transformation of China's Handicraft Industries (People's Publishing House, Peking, 1958) p. 101.

16 See, for example, Tu-tsu, Szu, “Inquiry on the Methods of Calculating the Gross Value of Production of Local Industrials and the Gross Value of Agricultural Production,” Tung Chi Yen Chiu, 1958, No. 8, p. 31; Yun-sheng, Kao, “Several Problems in Calculating the Gross Value of Production of Local Industries and the Gross Value of Agricultural Production,” Tung Chi Yen Chiu, 1958, No. 5, p. 24; and the previously cited articles by Li Keng-hsin and An Yu-shu. The dispute became more widespread in 1959 so that Chi Hua Yu Tung Chi, the official periodical of the State Statistical Bureau, devoted considerable space in the first few issues of 1959 to discussions on this topic under a special heading, “What is the Reasonable Computation of Production Value for the Commune Industries?”

17 In early 1954 the State Statistical Bureau was authorized to exercise full control over the supply of basic national statistics; any national economic data to be published in newspapers and magazines had to be reviewed and approved by the State Statistical Bureau.

18 Jen Min Jih Pao, 08 27, 1959.

19 Jen Min Shou Tse (People's Handbook), 1957, Ta Kung Pao, Tientsin and Peking, p. 450.

20 Although the total quantity of iron ore exported by Communist China in each year is not known, it cannot be insignificant. According to the statistics published by the U.N., Communist China exported to the USSR minerals in the following value amounts (Principally basic metals and their ores, concentrates, and alloys):

1955 602.1 million roubles

1956 653.5 million roubles

1957 638.2 million roubles

1958 598.4 million roubles

See U.N., yearbook, of International Trade Statistics, 1958, p. 516.

21 To be significant at the 5% level, a simple correlation coefficient computed on six observations should be 0.8114 or higher.

The Reliability of Industrial Output Data in Communist China

  • Kang Chao

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