The main reason now is that the confirmation method of infection is still under debate and improvement. The current method is nucleic acid detection, which only has about 50% accuracy, so obviously a huge number of people out there cannot be diagnosed, and they won't be added to the official number.

And there are also rumors out there saying the lack of medical resources. Sick people couldn't get proper medical treatment and dying at home or somewhere. Because they didn't get diagnosed before they die, so the number won't be added to the official number. Don't know if it's true or how many people are dying there, but sure it's terrifying.

About misreporting, they did do it back in January, mainly because they want to control the panic as they always do, (and probably they didn't know it's gonna be this bad), but it should be much better now (I hope).