Trump Is Undermining Trust in Official Economic Statistics. China Shows Where That Path Can Lead

Welcome back! Louise here. On Friday, President Trump fired one of the nation’s top economists after her agency published a disappointing jobs report. Trump claimed the numbers were “RIGGED,” but there’s no evidence that Erika McEntarfer or the Bureau of Labor Statistics (BLS) did anything improper. The new employment data, however, suggested Trump’s policies are having a negative impact on the US economy.

In the days since, Republicans have piled on, baselessly accusing McEntarfer of putting out “fake reports.” Trump hasn’t named a new BLS commissioner yet, but the saga has already left some Americans questioning whether government statistics can be trusted. If you want a glimpse of where that leads, just look at China.

The Chinese government has long been accused of inflating its annual GDP growth figures, especially at the provincial level. In 2007, the then Chinese premier told the US ambassador to China that his province’s GDP figures were “man-made.” To understand how his region was doing, Li Keqiang said he instead tracked electricity consumption, freight volumes, and bank loans, a system The Economist later dubbed “the Li Keqiang index.”

Over 15 years later, experts say things have changed significantly. The Chinese government now releases more economic data, and it's generally considered more reliable. “The data have improved dramatically over time,” says Nicholas R. Lardy, a senior fellow at the Peterson Institute for International Economics who has been writing about the Chinese economy since the 1970s.

One reason for this is that Beijing stopped grading local officials primarily based on the economic performance of their regions. That growth-at-all-costs mindset had led to societal problems like widespread pollution. In response, the Chinese Communist Party began putting more emphasis on nuanced ideals, like fostering innovation and reducing the urban-rural divide. That, in turn, reduced the incentive to manipulate GDP numbers in the first place.

But many analysts, both inside and outside China, believe that Beijing continues to fudge its overall growth numbers, in part because officials remain deeply concerned with projecting a rosy image of the economy. China officially reported that its economy grew by 5 percent in 2024, while the US reported only 2.8 percent growth.

At a conference in December, an economist at a Chinese state-owned investment firm said that “we do not know” China’s real growth figure, but he speculated it was far below what had been reported. When Xi Jinping got wind of the comments, he was reportedly furious and ordered the economist to be punished. Sound familiar?

As China’s economy cooled in recent years, officials have repeatedly sought to muzzle experts who share negative information or dare to question Beijing. Government departments have stopped publishing some industrial reports and employment indicators or temporarily delayed their release without explanation. Other data has become harder to interpret or can no longer be accessed from outside the country.

But like so many things in China, two seemingly contradictory things can be true at once. While the experts I spoke to acknowledged that China is far less transparent than the US, they say the information it does put out is now relatively accurate and often astonishingly detailed.

“I’m blown away by how granular it is for industrial surveys,” says Gerard DiPippo, associate director of the RAND China Research Center and an expert on China’s economy. “The data definitely has problems, but there’s enough there to tell a semi-accurate picture.”

DiPippo says he tries to stay away from debates about the reliability of individual Chinese statistics, because the discussion tends to frequently devolve into what he calls “data nihilism.” When every number is called into question, “people can believe whatever they want,” he explains.

If you are genuinely interested in trying to make sense of the evidence, it’s crucial to have the right political and cultural context going in. Take China’s national unemployment rate, for example, which fell only slightly when a large chunk of the country was under draconian Covid lockdown measures in 2022. Some observers were quick to assume that meant Beijing had cooked the books, but the more likely explanation is that the US and China simply relied on very different strategies to help workers survive the pandemic.

The US government focused on increasing unemployment benefits and giving out stimulus checks to individuals, which boosted consumer spending. Beijing gave factories and other businesses generous tax breaks, which encouraged them to keep people on their payrolls. “The unemployment numbers may be accurate, but if you want to learn what the real state of the economy is, it’s not going to tell you very much,” says Lardy.

Generally, Lardy says, he believes Chinese researchers are earnestly trying to interpret their country’s enormous and rapidly changing economy. While the government is certainly interested in controlling the narrative, sometimes datasets change for reasons that have nothing to do with censorship, such as when state economists discover mistakes or develop more innovative methods for crunching specific numbers.

“If it was just a matter of exaggeration or manipulation, it would be very simple,” Lardy says. “The complexity should be taken into account.”

Complexity isn’t unique to China. In both Beijing and Washington, understanding the economy requires technical skill and intellectual honesty, especially when the results aren't politically convenient.

This is an edition of Zeyi Yang and Louise Matsakis’ Made in China newsletter. Read previous newsletters here.