Using Satellite Observations to Validate China’s Output Data 

Researchers: Junjie Zhang (UC San Diego), Stephen Morris (Bowdoin College), and Qiang Zhang (Tsinghua University)
Location: China

Satellite Data

Chinese statistical data has long been cast under suspicion. One of the most crucial macroeconomic figures subject to manipulation is economic output. In China, it is frequently assumed that output is over-reported, as provincial officials compete for career advancement. When output is misreported, policymakers and researchers are prevented from obtaining an accurate sense of the economy's overall health, and the capacity to devise effective policies is diminished.

Scientific data collected by independent international satellites—including nighttime luminosity and, unique to the project, nitrogen oxides—are used in this study to compute indirect measures (proxies) for economic growth in China. The newly computed proxies are then used to test the hypothesis that economic output was over-reported by individual provinces during the downturn of 2008–2010.

To date, the research team has derived the econometric methodology necessary to test whether output was systematically over-reported over the Great Recession. They are currently processing their dataset and will have results in the coming months.