The National Bureau of Statistics of China reported that GDP dropped 6.8% in the first quarter. The first death in China from COVID-19 was on January 11, so the effects of the disease on the economy lasted most of the first three months of the year. China has been accused many times of misstating figures about gross domestic product, and there are reasons to believe that it has happened again.

China recently revised the history of COVID-19 deaths. It raised the death toll in Wuhan, the epicenter of where the virus began. Without a complete explanation, it increased the figure 50% to 3,869. Data for all cases and deaths from China could be understated, based on the sudden restatement. The Bing COVID-19 Tracker shows that total confirmed cases in China have been 88,273 and 4,632 have died.

China’s purchasing manufacture index, one of the primary measures of the nation’s economic health, has run at about 50 for the past several months. A figure above 50 shows expansion in the sector. Less than 50 signals concentration. In March, the number was 45. In February, it was 37.5. The Caixin China services purchasing managers index, which measures another considerable part of the economy, was 43.5 in March, up from 26.5 in February.

The Association of Automobile Manufacturers reported car sales declined by 42% in the first quarter to 3.7 million. China is the world’s largest car market. Auto sales cut across almost all consumer activity. The statistics are a sign, at least, of a brutal contraction.

Taken together, these data do not show the new GDP figures are wrong, but they leave open the question of accuracy.

The Carnegie Endowment for Peace recently supplied an analysis of China’s significant economic numbers. It is likely reflected in several other academic organizations’ research, which covers the same issue. Carnegie researchers report:

The Chinese economy is not growing at 6.5 percent. It is probably growing by less than half of that. Not everyone agrees that the rate is that low, of course. Still, there is nonetheless a running debate about what is happening in the Chinese economy and whether or not the country’s reported GDP growth is accurate.

Researchers at the National Interest said this about the accuracy of Chinese economic reporting:

China’s economy isn’t what it used to be (at least as recently as last week). Four intrepid economists—Wei Chen, Xilu Chen, and Michael Song of the Chinese University of Hong Kong, along with Chang-Tai Hsieh of the University of Chicago—have taken a fine-toothed comb to Chinese economic data to try to tease out China’s true rate of economic growth since 2008. Not surprisingly, they found that China has been over-reporting its growth rate by an average of 1.7 percentage points every year.

China may have a reason to post numbers that are better than expected. It may want to show its economy has not been wounded as badly as that of other large nations. In turn, it would indicate that China’s formula of COVID-19 worked better than that of any large nation. In other words, its GDP will bounce back to positive growth in the second quarter, even if the economic situation is bad.

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