Statistical Fraud is Baked into the CCP's Management...And They Know It

The Chinese Communist Party relies on statistics-based rankings to demonstrate success and to promote officials, creating incentives to falsify statistics from bottom to top. The Party's head-scratching campaign to address "formalism" appears to offer no real solution and suggests the Party may be collapsing in on itself. 

Last week China's Ministry of Agriculture and Rural Affairs held a meeting to prod Party officials to correct performance evaluation incentives that generate endless meetings, phony statistics, and reams of documents that distract grassroots officials from achieving practical results in agricultural and rural development work. This is part of a years-long campaign to eliminate so-called "formalism" (形式主义) that undermines the effectiveness of local Party officials and therefore diminishes the citizens' support. This year's campaign against formalism is said to be linked to the 15th five-year plan, but it may also be motivated by the top leadership's desperation to renew public confidence as the Chinese economy struggles. A 2024 document promoting the campaign warned that formalism "...seriously damages the Party's image, weakens the people's trust, and [could] become a major scourge affecting the development of the Party and the country." 

The Central Disciplinary Inspection Committee's (CCDI) explained that the cryptic "Remediate Formalism to Reduce Burdens on the Grass Roots" (整治形式主义为基层减负) campaign aims to resolve incentives for officials to build wasteful "image projects" and to report false data to boost their locality's position in rankings on lists of top counties or towns. Officials at the grass roots spend much of their time issuing reams of documents, reporting false data, accompanying upper-level officials on inspection tours, and sometimes bribing officials who compile the rankings and lists.

Cartoon explains that eliminating piles of documents frees up
grassroots officials to do their work. Source: Xinhua propaganda article.

Incentives to pad data are illustrated by the CCDI's 3 representative cases of formalism:

• Haicheng County in Liaoning Province paid 5 million yuan to the agency that compiles the "Top 100 Counties". In 2025 the county's ranking was boosted into the top 100, at no. 91. According to CCDI, Haicheng had previously been ranked 118.
• In Henan Province some counties fabricated data or pushed local enterprises to submit false documents after the Provincial Commerce Department set unrealistic targets in a campaign to attract investment. CCDI cited several localities in Henan that falsely reported large investments from outside the Province.
• Departments in Yunnan Province issued quarterly rankings of counties and municipalities based on industrial value added, growth rate, and fixed asset investment that prompted local officials to fabricate statistical data. CCDI said one county overstated the value of output by 34 local companies each year during 2022-24, and another county ordered its offices to fabricate registration documents for 284 projects that overstated fixed asset investment by 4 billion yuan.

CCDI called local officials' spending to buy "undeserved recognition" in rankings as "involution at the grassroots level" that increases financial burdens of local governments and encourages profiteering by agencies producing the rankings. CCDI criticizes provincial officials for setting "targets detached from reality", issuing an expanding menu of tasks to lower-level officials and allowing them to engage in superficial work and data fabrication. 

In parallel, the communist party also has a campaign to prevent and punish "statistical fraud" (防治统计造假) to uphold the "authenticity and accuracy of statistical data." The CCDI visits communist party and government units to carry out Gestapo-style investigations to root out the statistical abuses described above. This campaign appears to attack a symptom of incentives that are central to the anti-formalism campaign, but there is no obvious link between the two. The statistical fraud campaign was one of several key work topics laid out at the National Bureau of Statistics annual work meeting in January. The 4th decennial agricultural census is another giant statistical project scheduled for this year that is vulnerable to statistical fraud at the local level.

The anti-formalism and statistical fraud campaigns appear to rely on pledges of uprightness and ideological purity backed up by threats of punishment for fraudsters. The agriculture ministry's meeting issued vague orders to "remain vigilant" and to fully implement an unspecified "new work mechanism." The campaigns do not appear to remove the incentives to waste time on bureaucracy or to fake statistics. 

In fact, the second topic of last week's agriculture ministry meeting was an instruction issued to propaganda organs to shape public opinion by "telling the story" of poverty alleviation, rural policies, and popularization of science and technology--inflated statistics are integral to such propaganda. 

Incentives to pad statistics to qualify for subsidies or to meet unrealistic quotas remain baked into many of the Central Government's rural programs: 

• Xi Jinping's claim to have eliminated rural poverty 5 years ago is based on rural income statistics 
• The national food security program demands that local officials submit statistics demonstrating increases in grain production as part of their performance evaluations.
• Now local officials must also demonstrate that they are expanding vegetable production after high tomato prices became a national issue several months ago.
• Intergovernmental transfer payments to grain, oilseed, pork, and beef counties are based on rankings of counties based on production and marketing statistics. The top-ranked counties get annual "award" payments of about 5-to-10 million yuan.
• Crop subsidies for grains, soybeans, rice, cotton are distributed to counties based on area planted, which incentivizes local officials to pad statistics they report to the central government.
• Subsidies for storage costs given to local companies holding grain reserves incentivize overreporting.

There is no let-up on the critiques of spending too much time on multiple Government management apps and endless studies of Xi Jinping's instructions. Both campaigns are said to originate with Xi Jinping's instructions.

The Communist Party puts its faith in "scientific" decision-making based on data, yet the entire system appears to be riddled with intractable incentives to falsify that data. The flaws could be ignored when the economy was roaring, but the fat economic numbers no longer conform to on-the-ground evidence of abandoned housing complexes, empty shopping malls, and mortgage payments on homes that will never be built. Yet the regime has even more urgency to demonstrate success with glitzy economic figures, so there is no wiggle room to engage in the needed fundamental reforms.

In the meantime, China watchers have little recourse but to watch data that can't be easily faked, mainly market prices and foreign trade data.