China Hopes to Diminish Fraud in Crackdown on Local Offices
China is planning to increase penalties for local governments for financial fraud and employ AI technology as a solution.
Beijing is deploying artificial intelligence (AI) in an attempt to reduce financial fraud and increase local leaders' responsibility.
The debates on the accuracy of China's economic data heated up again this month after the National Bureau of Statistics (NBS) released data showing economic growth fell to 6% in the third quarter.
As part of the crackdown on local government fraud, Beijing plans to amend the statistics law of the People's Republic of China to hold top local leaders accountable. As reported by the South China Morning Post, the draft amendment to the law states that local statisticians and regional executive leaders will be dismissed if they are found to have provided false data.
The draft, expected to be open for comment on Nov. 9, also said the government will use technology such as big data, cloud computing and artificial intelligence to help compile reliable statistics.
Moreover, as the regional gross domestic product (GDP) reported by China's provinces has been significantly higher than the national figures, the NBS has promised to compile provincial GDP data to eliminate this inconsistency start from next year, as reported by the SCMP.
Among the main reasons for the adoption of these measures is investors in China are suffering from a lack of credibility of financial statements. The reduction of the overall transparency and financial fraud has made it difficult to assess China's economy and its needs, even for policymakers. This makes it difficult for China to make correct economic decisions based on the data obtained, as reported by various local sources.
In June last year, NBS announced that 1195 companies and 2775 investment projects inflated their earnings or covered losses in just the first four months of 2018. At the Third Session of the Standing Committee of the 13th National People's Congress, held on June 19, 2018, the vice-chairman of the committee Dongming Wang said that some institutions lost data, repeated reports and exaggerated financial figures to achieve the expected estimates. He suggested that the State Council should intensify its efforts to formulate measures for the administration of civil statistical investigation activities.
Amid China's overall economic slowdown and companies' failures to meet analysts' expectations, Beijing has to take strides in dealing with fraudulent data.