China’s sugar-coated stats a bittersweet pill of economic lies

China has become addicted to sugar-coated statistics. 

Hooked on a bitter-sweet pill of upbeat numbers, Beijing has been accused of “manipulating data” to bolster President Xi Jinping’s regime and paper over the cracks of a slowing economy.

Naturally, you would not have noticed that phenomenon from figures released by the National Bureau of Statistics in July. Confounding expectations, second-quarter GDP growth jumped by 3.2% compared to the same period in 2019, despite the fallout from the Covid-19 catastrophe.

“So, is China’s economy truly in a good shape or is such a statement to be seen as a mere facade, shadowing a highly unstable country? If recent trends emanating from the country were to be analyzed, one could indeed point to the latter,” Zeus Hans Mendez, of the Center for Security and Strategy Studies, said.

In a move to prop up the economy, the ruling Communist Party government has boosted fiscal spending and made borrowing cheaper for businesses.

Laced with optimism

Manufacturing activity has started to increase while exports have shown signs of recovery despite sluggish imports and consumer demand.

Industrial profits have also picked up, rising 11.5% in June compared to the same period last year to 666.55 billion yuan or US$95.27 billion.

Even so, for the six-month period between January to June, that was 12.8% down on 2019 figures.

“Generally speaking, the national economy overcame the adverse impact of the epidemic in the first half gradually and demonstrated a momentum of restorative growth and gradual recovery, further manifesting its development resilience and vitality,” the National Bureau of Statistics reported in a July statement laced with optimism.

Yet others are not so confident about a sustained “recovery” or the numbers spoon-fed from Beijing.

“Reports questioning the accuracy of data released by the Chinese government have been in circulation for a long time. China’s actual GDP and GDP growth projections are in fact not [what] they seem,”  Mendez, of the Center for Security and Strategy Studies, wrote on the think tank’s website.

“The country’s national accounts and statistics are based on the cumulative data collected by local governments. It is common knowledge that these local governments are rewarded for meeting growth and investment targets, and therefore have an incentive to manipulate their data,” he said.

There are also other problems lurking on the horizon even if the recovery is not just a figment of the all-powerful Politburo’s imagination.

‘Climate crisis paradox’

Richard Smith, an economic historian on China, warned that emissions could rise as Xi’s administration grapples with a “climate crisis paradox” and fires up the nation’s coal-polluting power stations.

In turn, this could drive up CO2 levels and choke off measures to contain and reverse climate change across the planet.

“As China struggles to recover economically from the impact of the pandemic, it is set to deal a painful blow to global efforts to fight climate change,” Smith said in a commentary for Foreign Policy.

“The Party has often sacrificed environmental regulations as soon as GDP targets and economic growth have been threatened, thus industrial or trade decline paradoxically produces soaring pollution,” he said.

Yet another addiction that Beijing needs to kick along with those sugar-coated stats.