There is hardly a wheel left on China’s economic bandwagon. As it grinds to a halt, General Secretary Xi Jinping’s obsession with raw power and the Communist Party’s mantra of a permanent “struggle” against real or imaginary enemies have wreaked havoc.
Secrecy has replaced sustainability while lies have become economic facts for the Xicophants.
Official unemployment numbers for those aged between 16 to 24 were at a record high of 21.3% in June. But the real figures could be a staggering 46.6%, according to Zhang Dandan, of the prestigious Peking University.
Again, secrecy and subterfuge are the key ingredients with the Financial Times reporting last week that the Party puts Chinese economists under “intense pressure” to mask the truth.
“The regulator doesn’t want to hear negative comments about the economy in public. They wanted us to interpret bad news [in] a positive light,” an unnamed adviser to China’s central bank told the FT.
State of play:
- Data released today showed the world’s second-largest economy is locked in a deflationary circle.
- It came off the back of disintegrating trade numbers earlier this week.
- Exports fell by 14.5% last month compared to the same period in 2022 as factory activity slumped.
- It was the biggest drop since February 2020 when the initial Covid-19 outbreak shattered China’s economy.
Smoke and mirrors: Yet China’s state-controlled media did manage to come up with sleight-of-hand sound bites to put a positive spin on the numbers. “Foreign trade grew by 0.4% year-on-year in the first seven months of 2023,” Global Times trumpeted.
Between the lines: “Local government debt reached 92 trillion yuan (US$12.8 trillion), or 76% of economic output in 2022, up from 62.2% in 2019,” Reuters reported this week.
Big picture: Ian Johnson, at the Council on Foreign Relations, summed up the mood perfectly. “[Xi has] failed to address economic problems, which have festered and resulted in a slowdown that for many Chinese feels like a full-blown recession,” he said.
The bottom line: “Economic growth numbers can be fudged but ultimately people know what they know – and they know that they have less money in their pockets,” he wrote in a blog post for the New York-based think tank last month.
China Factor comment: In 2021, former premier Li Keqiang warned of the dangers of spiraling unemployment and the threat to “social stability.” Fast forward two years and the situation has reached a crisis point.