[fspeech]

Chinese GDP is not a sum of locally reported GDPs. Locally reported GDPs have always exceeded the total GDP, sometimes by a large margin. Now they may lag.

A large motivation is how the taxes collected are shared between the central government and the local governments. A new tax sharing scheme introduced last year makes underreporting of the local GDPs profitable for the local governments, meaning they get to remit less taxes to the central government.

[chris_t]

Oh, that makes sense. I'd hoped the trend was towards a higher level of reliability but perhaps it's just a change of direction in the manipulation.

[fspeech]

If you look at large companies' accounts, they typically have inter segment reconciliations. Where intra-company trades are booked can be artificial. In the Chinese case, the city of Tianjin, e.g., which has a financial district, booked revenues from companies registered there but conducting no substantial business there in its own local GDP. This is akin to the state of Delaware including in its own GDP report (if there is such a thing) all companies registered there. But this inflation has no effect on the national GDP, which is aggregated over the businesses directly, so it does not matter how many provinces claim the businesses as their own. Hope this helps put things in context a little bit for you.