In the hope of collecting more accurate economic data, the National Bureau of Statistics (NBS) plans to begin obtaining information directly from industrial, service and real estate companies. About 700,000 companies, which together contribute about 80% of the nation’s GDP, are required to upload production, income and spending statements and other information directly to the National Data Center or provincial data centers. The database will make data collection more efficient and is also meant to help prevent local authorities from inflating statistical information.  China’s 31 provinces and regions reported total gross domestic product (GDP) of CNY51.8 trillion, CNY4.6 trillion more than the national GDP last year. In 2010, the difference between the two GDPs was CNY3.2 trillion and in 2009 the gap was CNY2.68 trillion. Wang Xiaru, Analyst at Changjiang Securities, said the provincial GDP figures may not be accurate. By value, Guangdong province’s GDP was the highest at a record CNY5.3 trillion last year. Jiangsu province was second with CNY4.9 trillion and Shandong third at CNY4.5 trillion. Chongqing and Tianjin municipalities grew the fastest by 16.4% each last year.

China needs to reduce its reliance on external demand to lessen the impact of a possible worsening debt crisis in Europe, the International Monetary Fund (IMF) said. A sharp downturn in Europe could cut China’s economic growth rate nearly in half, it added. The IMF forecast 8.2% growth this year for China but said that could be reduced by up to 4 percentage points if Europe’s crisis causes large declines in credit and output. “The global economy is at a precarious stage and downside risks have risen sharply due to worsening conditions in the euro area,” it said in a report. The World Bank told China and other developing countries last month the coming global slump might hit them harder than the 2008 economic crisis. China has responded to a plunge in global demand by promising bank lending and other aid to struggling entrepreneurs. Last month, the IMF downgraded China’s growth projection for 2012 to 8.2% from 9%. “If the unfortunate downside scenario in Europe becomes a reality, China should respond with an even more significant fiscal package that can be executed through central and local governments,” it said in the report. China’s housing market won’t become a threat to China’s economy, the IMF said, noting that it was beginning to deflate, with price growth slowing and transaction volumes down. It said underlying investment remained healthy, in part due to the government’s efforts to expand the supply of social housing. A modest decline in property prices should be regarded as a welcome development, the IMF said, as reported in the Shanghai Daily.

Chinese inflation jumped in January, breaking a streak of five straight monthly declines, but seasonal factors were largely to blame and price pressures were expected to weaken in the coming months. The consumer price index (CPI) rose 4.5% from a year earlier, up from December’s 4.1% pace. The main cause of the rebound was the shopping spree for the Lunar New Year holiday, which pushed up food prices, an effect which has regularly been seen in the past and is likely to be temporary. Core inflation, stripped of food costs, rose much more slowly, giving Beijing some room to stimulate the slowing economy if necessary. “It is very likely that after the holiday, prices will come down, especially for food. Next month’s number should be lower and that will ease concerns,” said Ken Peng, Economist with BNP Paribas. But even if January’s rebound was a seasonal aberration, the fact that it was well above market expectation for steady inflation may reinforce the caution of policymakers. Beijing has been reluctant to take aggressive action to prop up growth, with the economy slowing only very gradually so far. The government is also wary of repeating the massive debt-fueled stimulus it used in 2009 to rescue the economy from the global financial crisis. Weakening inflation is unlikely to prompt a change in that cautious stance, but it does expand the comfort zone for policymakers as they debate tactics should the economic picture worsen dramatically, the Financial Times reports. The Producer Price Index (PPI), which measures inflation at the factory gate, expanded 0.7% year on year in January, compared with 1.7% in December. Zhu Haibin, Economist at JP Morgan, expected inflation this month to be around 4%, but to moderate in the next two quarters until it hits around 2.8%. Lu Zhengwei, Chief Economist at Industrial Bank, expected CPI growth to return to 3.5% this month due to a higher comparative base and the elimination of seasonal factors.

Urban and rural income surveys will be standardized amid plans to publish an internationally accepted measure of wealth distribution, Xie Hongguang, Deputy Director of the National Bureau of Statistics (NBS), said. A nationwide survey will provide basic data for China’s Gini coefficient calculation, and will cover about 140,000 urban and rural households. The new income data is scheduled to be published in 2013 to pave the way for the publication of a national Gini coefficient that can measure income inequality, Xie said. The survey will be part of the Sino-Canadian statistics cooperative program. Statistics Canada has shared its experiences in collecting and processing data, Xie said. Since 2000 the NBS has published a Gini coefficient that focused on rural income and that stood at 0.3897 in 2011. The coefficient measures income distribution on a scale of zero to one. A reading of zero means perfect equality – everyone earning the same amount – while one represents the greatest inequality. NBS Director Ma Jiantang last month cited incomplete data on high-income groups as the main reason for the failure to provide a national coefficient. China had 960,000 millionaires with more than CNY10 million in personal wealth in 2010, a rise of 9.7% over the previous year, the Hurun Research Institute and GroupM Knowledge reported in 2011. The per capita disposable income of urban households last year was CNY21,810, while the per capita net income of rural households was CNY6,977. The World Bank estimated that China’s Gini coefficient had reached 0.47 in 2009, higher than the internationally accepted threshold of 0.4, which indicates income inequality may threaten social stability. Another international project that the NBS is involved in is the International Comparison Program (ICP) that started last year. The ICP collects prices of goods and services to calculate the purchasing power of different currencies. It helps compare the output of economies and the welfare of their inhabitants in real terms allowing adjustment for different price levels. The NBS also plans to start more cooperative programs with the Federal Statistical Office of Germany to improve the gathering of industrial statistics, the China Daily reports.

The central government will set up a CNY15 billion fund as part of a package of measures to avoid widespread closures of small and medium-sized enterprises (SMEs). Zhu Hongren, Chief Engineer at the Ministry of Industry and Information Technology (MIIT), said the measures would involve monetary incentives to ease financing difficulties for tens of millions of SMEs, reduce their costs and help them climb the value chain. The measures follow recently introduced fiscal initiatives such as cuts in administrative fees and corporate tax rates. Growth in industrial output is expected to be hit by slowing demand overseas, weaker domestic consumption, and big rises in wages and operating costs in the second half of last year. Industrial output grew 12.8% year on year in December compared with a 12.4% in November and a 13.2% increase in October. On a full-year basis, industrial output grew 13.9% last year, compared with growth of 15.7% in 2010. The CNY15 billion fund is to be set up by the Ministry of Finance, which would put CNY3 billion a year into the fund over five years. In export-oriented Guangdong, the government plans to lower SME’s administrative fees and social welfare contributions, offer favorable prices on industrial sites, and help them access bank financing and new markets.