China’s economic tricks conjure a grand illusion
Manipulated official data fails to hide the true state of the world’s second-largest economy
China’s economic numbers rarely add up. At times, they resemble conjuring tricks. Or, red rabbits being mysteriously pulled out of top hats. Grand illusions.
Earlier this week, the latest batch of data released by the National Bureau of Statistics certainly had streaks of the bizarre running through it.
Analysts have always been wary of China’s fantasy GDP figures but now the economic problems run much deeper.
“Actually China – when it manipulates – manipulates more than just the GDP,” Shehzad Qazi, the managing director of the research group China Beige Book, tweeted.
“Inputs in CAT [China Activity Tracker] are largely official data, including retail sales and fixed asset investment, which were explicitly manipulated as recently as 2H [the second half of] 2020,” he said, referring to economic data from the China Power Project at the Center for Strategic and International Studies, a Washington-based think tank.
Game of numbers:
- Retail sales for January and February edged higher to 3.5% compared to the same period in 2022, the National Bureau of Statistics revealed on Wednesday.
- Industrial production also increased by 2.4% during the same period.
- Government spending further boosted fixed asset investment, which jumped 5.5%.
- But the property sector took another big hit with investment down by 5.7%.
Delve deeper: China’s US$18 trillion economy is in a mess with ballooning local government debt, a real estate meltdown, and a rapidly aging workforce.
Between the lines: “Beijing is facing an economic minefield of its own making … China’s current debt crisis represents a perfect storm,” Craig Singleton, of the Foundation for Defense of Democracies in Washington, said.
Alternative view: Global Times, the state-run nationalistic newspaper, was quick to spout the tightly-controlled economic narrative of the ruling Communist Party.
What it said: “Western media continue to bad-mouth China’s economic potential, with ‘China woes’ dominating foreign media headlines, dismissing positive factors in the world’s second-largest economy.”
China Factor comment: Under Chairman of Everything Xi Jinping, the Party has become the master of spin. But pulling a new economic miracle out of one of those top hats would be a creative masterpiece.