Power struggle rages over Russia’s state statistics

A general view of a building of the Federal State Statistics Service (Rosstat) in Moscow. Russia's economy expanded for the first time in two years in the fourth quarter of 2016, data from the state statistics service showed. (AFP)
Updated 03 April 2017
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Power struggle rages over Russia’s state statistics

MOSCOW: Reports that Russia’s Economy Ministry is set to take control of the national statistics agency has sparked fears that indicators crucial to monitoring the country’s economic woes could become skewed.

Data from the Rosstat state statistics agency has been key in measuring the extent of the country’s economic crisis, triggered three years ago by tumbling oil prices and Western sanctions over Ukraine, and is thus key to forecasts about when recovery is possible.
With Russians worried about their shrinking purchasing power and a presidential election due next year, perceptions about the economy and its outlook are touchy topics.
Enter into this volatile mix a switch by Rosstat to new calculation methods that are in line with European standards, which has caused rampant confusion inside the agency that has resulted in it publishing reports late and issuing major corrections to its findings.
Widespread issues over the adoption of the new methodology have prompted the government to prepare to make Rosstat — which currently reports to Prime Minister Dmitry Medvedev — answerable to the Economy Ministry in a bid to exercise more control over it, Russian media has reported.
The prime minister’s current oversight is mostly administrative, while the Economy Ministry is responsible for producing forecasts for the government based on Rosstat data.
Analysts fear that as the presidential polls approach Rosstat could come under pressure to produce statistics that would paint a rosy picture of the economy, much as in the Soviet era when authorities used statistics for propaganda purposes, boasting about exceeding production plans.
“This is a pre-election year and if the main socioeconomic indicators are bad, this would look like a lack of respect for the promises” President Vladimir Putin made during his 2012 campaign, said Igor Nikolayev, an analyst at FBK Grant Thornton, an auditing and consulting group.
“If growth reaches 2 percent, then we will say that the sanctions bothered us but all the indicators are now positive,” he added.
Some of Rosstat’s new calculations have proved encouraging for authorities. The agency revised upward its production indicator and calculated that the economy had contracted by only 2.8 percent in 2015 — instead of the 3.7 percent it had previously estimated.
It also said that the economy contracted by only 0.2 percent last year, instead of the 0.6 percent it had previously measured. These changes in Russia’s indicators have transformed the storyline of the country’s economic crisis. With the new figures, Russia’s government can proudly proclaim that the economy has shown unexpected resistance to the double shock of low oil prices and sanctions thanks to a boost to the industry from the weak ruble and dynamic small businesses.
Last month a low indicator for industrial production that was published behind schedule by Rosstat sent a jolt through the Economy Ministry.
Economy Minister Maxim Oreshkin, who took on the position in November, said Rosstat’s transition to its new methodology had been “very unfortunate” and that he expected its figures to undergo “major revisions” while his ministry prepares to announce its forecasts.
In a 2013 report, the Organization for Economic Co-operation and Development (OECD) group of leading economies praised Rosstat’s “high level of professionalism” while saying the agency should improve its methodology for calculating gross domestic product (GDP) and its compliance with international standards.
Former Deputy Economy Minister Alexei Vedev told TASS news agency that Rosstat’s rocky transition to its new methods was the result of resistance by the agency’s ageing staff and the inability to offer attractive wages to young economists.
Changing the supervision of the agency will not solve the problem, Vedev said.
“Our responsibilities will not change with our status,” the head of Rosstat, Alexander Surinov, told Vedomosti business daily, stressing that Russian legislation guarantees the agency’s “professional independence.”
Analysts, however, are skeptical that Rosstat will be able to steer clear of government influence. “The statistics agency must be as independent as possible,” Nikolayev said.
“I have no doubt that a change in leadership will affect Rosstat’s activities, and this will affect the reliability of statistics.”


China opens up finance sector to more foreign investment

Updated 20 July 2019
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China opens up finance sector to more foreign investment

  • China will remove shareholding limits on foreign ownership of securities, insurance and fund management firms in 2020
  • Beijing has long promised to further open up its economy to foreign business participation and investment

BEIJING: China lifted some restrictions on foreign investment in the financial sector Saturday, as the world’s second largest economy fights slowing growth at home and a damaging trade war with the US.
China will remove shareholding limits on foreign ownership of securities, insurance and fund management firms in 2020, a year earlier than originally planned, the Financial Stability and Development Committee said in a statement posted by the central bank Saturday.
Foreign investors will also be encouraged to set up wealth management firms, currency brokerages and pension management companies, the statement said.
Beijing has long promised to further open up its economy to foreign business participation and investment but has generally dragged its feet in implementing the moves — a major point of contention with Washington and Brussels.
Saturday’s announcement followed a Friday meeting chaired by economic czar Liu He where policymakers focused on tackling financial risk and financial contagion and pledged new steps to support growth, according to a state council statement.
Additional measures include scrapping entry barriers for foreign insurance companies like a requirement of 30 years of business operations and canceling a 25 percent equity cap on foreign ownership of insurance asset management firms.
Foreign owned credit rating agencies will also be allowed to evaluate a greater number of bond and debt types, the statement said.
US President Donald Trump has launched a damaging tariff war in an attempt to force Beijing to further open up its economy and limit what he calls its unfair trade practices.
The US and China have hit each other with punitive tariffs covering more than $360 billion in two-way trade.
Trump and Xi Jinping agreed to revive fractious trade negotiations when they met on the sidelines of the G20 summit in Japan on June 29 and top US and Chinese negotiators have held phone talks this month.