China’s numbers game fails to hide economic dangers
‘Like with everything, backwards-looking data’ is ‘being disregarded or taken with a big pinch of salt’
Forget the numbers, China’s economy is still struggling. In today’s snapshot of spending power, the National Bureau of Statistics reported that retail sales jumped nearly 6% in March compared to the same period last year. Factory output also expanded by 7.7%.
Overall, first-quarter GDP growth hit 5.4%, which was above the annual target of 5%.
But the data only tells half the story as China’s manufacturers front-loaded exports ahead of an expected tariff war with the United States. Chinese imports now face an eye-watering 145% duties in the world’s largest economy.
Fudging those figures will be nearly impossible to do, even though official economic statistics are notoriously unreliable because of a lack of independent verification.
What you see is what the ruling Communist Party wants you to see. The data also covered a period before American tariffs kicked in.
“Like with everything, backwards-looking data [is] being disregarded or taken with a big pinch of salt. It captures a period prior to the implementation of tariffs and the slowdown that will incur,” Kyle Rodda, a senior market analyst at Capital.com Australia, said in an email.
Behind the numbers:
- Consumer subsidies boosted retail spending. But domestic demand is still anaemic after the real estate crisis “destroyed US$18 trillion” or 70% of household wealth.
- Urban unemployment continues to be pegged around 5% despite an AI and automation boom. Yet those aged between 16 and 25 have been hit with the jobless rate ballooning.
It’s a matter of life and death …This is very severe.
Candice Li, marketing manager of Conmo Electronic
Delve deeper: “Is China’s data manipulated or flawed? Maybe both … [amid] the autocrat’s playbook of burying unflattering statistics,” The Wall Street Journal reported back in 2023. Nothing has changed since then.
Between the lines: Export orders to the US are vanishing with panic descending on the Canton Fair this week. China’s trade expo in the southern city of Guangzhou has attracted 30,000 companies, showcasing products over “an area larger than 200 football fields.”
Bottom line: “It’s a matter of life and death because 60-70% of our business is with American clients. Goods cannot be exported and money cannot be collected. This is very severe,” Candice Li, the marketing manager of Conmo Electronic, told Reuters news agency.
Big picture: In a move to beef up its trade team, Beijing has announced that Li Chenggang will take over as deputy minister of commerce, according to an official statement.
What they said: “In the view of China’s top leadership, they may need someone else to deescalate tensions [with the US],” Alfredo Montufar-Helu, the head of the China Center at The Conference Board in New York, told CNBC.
China Factor comment: A manufacturing revolution is gripping China with the emergence of “dark factories” powered by robots and AI. The plants “operate without human workers or traditional lighting.” The result will be job losses on a scale that will spook even Beijing.