Western areas still leading way on growth

Causes of weakening

Compared with last year, GDP growth of many local economies has weakened. For instance, growth in Yunnan, which was 9.1 percent in the first three quarters, the fastest in the country, was significantly lower than that of Guizhou, which registered the fastest growth nationally of 10.2 percent last year.

Local economies weakened as national economic growth fell to 6.5 percent in the third quarter from 6.8 percent in the first. This was due to falling infrastructure investment and consumption, tightened financial regulations and environmental protection measures that have affected liquidity and production in some areas, weak external demand, and uncertainties caused by the recent China-US trade disputes.

Faced with slowing growth, the central authorities adjusted their regulatory stance by adopting targeted measures in some sectors to channel funds into the real economy and infrastructure construction, steps that have benefited local growth.

The Sino-US trade disputes have affected some local economies, mainly the exporting eastern provinces.

Some areas, such as Zhejiang, Jiangsu and Shanghai, may be affected the most by the trade disputes between the two countries, Song said.

"We expect to see disruption in a number of provinces that rely heavily on trade for economic growth, including Guangdong, Jiangsu, Zhejiang, along with Shanghai. These areas are China's traditional exporting powerhouses, accounting for more than half of the country's total export flows in 2017," the Economist Intelligence Unit said in a report in September.

Last year, exports as a percentage of regional GDP stood at 50 percent in Guangdong, almost 40 percent in Zhejiang and Shanghai and at about 30 percent in Jiangsu, according to the report.

These areas will have to face changes and work out solutions. "They need to adapt to the new situation through product innovation, industrial upgrading and tapping new markets in other countries, such as those involved in the Belt and Road Initiative," Song said.

Strengthened environmental protection measures have also affected local growth, according to a research note by Everbright Securities.

"These measures have had some impact on local growth, but the effect is waning ... after the authorities banned some local practices, such as willfully stopping production in factories, which violated regulations," the note said.

Statistical reform

Strict implementation of the statistics law also has had an effect on the results of local economies as the central authorities have tightened monitoring of statistical bureaus, the securities firm said.

Since 2016, the authorities have released a series of documents urging that the quality of statistics be improved and that those involved in falsifying data be severely punished.

The total for the GDP figures reported by all provinces, regions and municipalities is often higher than the final one calculated by the National Bureau of Statistics. This is either for technical reasons, such as duplicated calculation by local bureaus, or falsifying of figures by local officials.

Last year, the total for all local GDP figures was 2.4 percent higher than the figure calculated by the NBS, but the gap was significantly narrower than in previous years, showing that tightened top-level statistical monitoring has played a role in improving the accuracy of GDP calculation, Everbright Securities said.

From next year, the NBS will reform the system used to collect and calculate data. At present, city and provincial statistics bureaus collect information, such as output data, for their jurisdictions and calculate GDP scale, but after the reforms are introduced, this power will be transferred to higher authorities.

As a result, central statistical authorities will be in charge of calculating provincial-level GDP, and provincial bureaus will handle GDP calculation for cities.

Such reforms aim to avoid falsification of GDP figures and make statistics more accurate, analysts said.

"The move will help unify national data and local statistics," said Cai Zhizhou, a statistics professor at Peking University.