Data | data sharing set to improve china’s financial reporting

Data sharing set to improve China’s financial reporting

Plans to develop an electronic statistical ledger system for businesses and relax restrictions on government interdepartmental data sharing have been announced by China’s National Bureau of Statistics (NBS).

The announcement came in response to criticism of inaccurate data reporting by enterprises and individuals, with critics suggesting the NBS could utilize the country’s tax system to cross-verify data to reduce errors.

In response, the NBS said it is committed to pushing the easing of legal restrictions on data sharing between governmental agencies, and building a statistical ledger system for businesses to improve efficiency and data value.

Speaking to the Global Times website, Ye Qing, former deputy head of the statistics bureau of Central China’s Hubei Province, said: “China has been actively promoting data sharing among various departments in recent years, it has developed a unified reporting platform for businesses and individuals to file taxes and report census data, allowing multiple governmental departments to collect and cross-verify data, and the initiative not only simplifies the reporting process for businesses and individuals but also improves data accuracy.”

He added that, with the use of big data, AI and other technology, government departments can now access the same data through a unified platform, preventing businesses from concealing true data or reporting different figures to different agencies for profit.

Ye said that in the past a company might report higher profits to banks for loans and lower profits to tax authorities to seek tax breaks. The establishment of a unified big data platform resolves these issues and enhances the accuracy of statistical data.

The NBS acknowledged existing challenges in data collection work, particularly in inconsistent data definitions and varying reporting timelines between government departments. The bureau will focus on putting down legal barriers that currently hinder the sharing of microdata among departments.

 

China to toughen up efforts to tackle financial fraud  

China is tightening up efforts to tackle prevent financial fraud, the State Council, China’s cabinet, has confirmed.

Guidelines drafted by six government agencies, including the China Securities Regulatory Commission (CSRC), Ministry of Public Security and the People’s Bank of China, outline 17 measures to tackle fraud. It recommends strengthening supervision and improving the quality and efficiency of law enforcement.

A spokesperson with the CSRC, China’s securities watchdog, said the organisation is looking to raise the punishment for filing incorrect information from 600,000 yuan ($82,565) to 10 million yuan for companies, and from 300,000 yuan to 5 million yuan for individuals.

The upper limit of fines for IPO frauds is to be raised from 5% of the raised funds to 100%.

Experts say the moves are a “turning point” in market supervision. Xi Junyang, a professor at the Shanghai University of Finance and Economics, said: “Although there had been various safeguards and regulations in place before, the severity of punishment lacks enough deterrence, leading to the emergence of illegal behaviors. The new regulation significantly increased the costs of crimes.”

Xi added: “This is extremely positive news for the capital market as it reiterated the principle of a capital market governed by rules, adding that the move will lead to better investor protection and the forging of a fair, just and open capital market. “Without these traits, the capital market cannot retain its attractiveness to investors, especially individual and small investors who are often at the disadvantageous end of the market.”

The agencies said both ‘culprits’ and ‘accomplices’ will be held accountable, and those responsible for counterfeiting and co-operating with counterfeiting, including third-party organizations such as intermediaries and financial institutions, will be prosecuted by law enforcement. “The ecosystem of fabricating false financial statements by professional criminal gangs should be resolutely smashed,” it said.

It added that the mechanism of incentivising whistle-blowers and co-ordination with criminal prosecution agencies, as well as co-ordination between the central and local government, will be improved.