The Chinese Bureau of National Statistics has accused a county government in Yunnan of faking economic data.
Authorities "coerced local companies" in a bid to inflate the value of their output to boost economic figures, it has been claimed by the body.
Patrick Chovanec, chief strategist at Silvercrest Asset Management, explained this is not the first time a similar story has come out in China.
"The fact that the government has now admitted that this is happening confirms the doubts that people have had for a long time," he told the BBC.
Xinhua reported that the statistics bureau said that the issue had "seriously affected the authenticity and independence of company data".
According to Schroders' chief economist Keith Wade, the Chinese economy could be heading for a slowdown unless it picks up in the near future.
However, he noted the other Brics nations – such as Brazil, India and Russia – may also be at risk of experiencing a slowdown in the coming months and years.
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