Chinese CPI dramatically understated over last 5 years, according to Beijing think tank

People are going hungry in increasing numbers in China. Be prepared for increased social unrest. Below is a report from Reuters. Lincoln


Inflation "under-statement" sparks row in China
Thu, Nov 11 2010
By Aileen Wang and Simon Rabinovitch

BEIJING (Reuters) - With price pressures on the rise in China, a rare public spat has broken out in government circles about whether the statistics agency is suppressing the full truth of how high inflation really is.

Many Chinese have long harboured suspicions about the quality of official inflation data, saying that it does not adequately capture soaring property prices or food costs.

But criticism took a curious turn this week when the Chinese Academy of Social Sciences, a top government think-tank in Beijing, published a research article arguing that the consumer price index had been under-stated by more than 7 percent over the past five years.
The National Bureau of Statistics, which regularly defends the quality of its output, swung into action.

"Obviously, the article's conclusion does not hold any water," Sheng Laiyun, NBS spokesman, told reporters.

The think-tank report found a gap between historical inflation figures and those that can be calculated based on the supposed weights assigned to the various components of the consumer price basket.

The inference was that the NBS might have been massaging reported data by changing weightings without informing the public.

"While only publishing the sub-indices of eight categories but not releasing changes in basket weightings, there is an opportunity to adjust the CPI figure," wrote Xu Qiyuan, author of the report.