Validating China’s Output Data Using Satellite Observations

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

Project Description

Satellite Data

Chinese statistical data has long been cast under suspicion. One of the most crucial macroeconomic figures subject to manipulation is output. In China, it is frequently assumed that output is over reported, as provincial officials compete for career advancement. When output is misreported, policy makers 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 for the purpose of computing indirect measures (proxies) for economic growth in China. The newly computed proxies are then used to test the hypothesis that output was over reported by individual provinces during the recent downturn of 2008 – 2010.

To date, the research team has derived the econometric methodology necessarily 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.