China’s economy disappears in a maze of numbers
Turbulent geopolitical times and an ongoing trade war spark closer scrutiny of Beijing’s official data
Scrambling through the maze of numbers fails to capture the mood of China’s sluggish economy.
The veracity of official and privately collected data has always been questioned under the opaque nature of the ruling Communist Party. But now there is even closer scrutiny amid turbulent geopolitical times and an ongoing trade war.
Domestically, a property collapse, high unemployment among young Chinese, and global supply chain shifts have shrunk consumer spending as wages stagnate.
“In cities and towns across China, up to 80 million properties sit vacant,” political risk analyst Henry Storey wrote in an analysis published earlier this week on the Lowy’s Institute’s Interpreter site.
“The cumulative result of decades of overbuilding driven by speculative demand is now exacerbating the parlous state of the country’s provincial economies,” he said.
The PRC [People’s Republic of China] has dug itself a debt hole.
Derek Scissors, of the American Enterprise Institute
But first the numbers:
- China’s labor market continues to shrink.
- Last week, the National Bureau of Statistics, or NBS, reported that employment contracted for the 16th straight month.
- Caxin’s private survey was down for the 10th consecutive month.
- Factory activity was also mixed, depending on which survey you trust.
Between the lines: “June’s discrepancy in the NBS and Caixin PMI [factory activity data] is likely down to statistical white noise and month-on-month sampling biases,” research group Trivium reported.
Delve deeper: Unemployment between people aged 16 to 25 was still in double digits even though the official figures have been doctored. The true number could be as high as 46%.
Big picture: Local government debt has ballooned to around US$11 trillion. But that is just part of a broader problem.
What this means: “The PRC [People’s Republic of China] has dug itself a debt hole, faster than the [United States], and possibly anyone else, ever has,” Derek Scissors, of the American Enterprise Institute, wrote in a report last month.
China Factor comment: Infrastructure and property sectors once made up 30% of the country’s GDP. But those days are over. Instead, Beijing is trying to export its way out of trouble, fuelling trade tensions with the US, Europe, and other G7 nations.