China’s economy is being distorted by fake figures

Fake figures equal fake news. Last week, President Xi Jinping called for an end to misleading economic data in China, vowing to crack down on artificially inflated growth numbers. Local governments were singled out in a stark warning.

Yet his comments came at a time when Beijing has massaged so many numbers that they lack shape or form. Bad news has been suppressed or sanitized. Economic stats appear one month and disappear the next.

Still, this is down to the central government, not local governments. As if to shift the focus from these psychological tricks, Xi has voiced concerns about “reckless” projects. He pointed to quick-fix solutions across the country that lack long-term substance.

“All plans must be based on facts, aiming for solid, genuine growth without exaggeration, and promoting high-quality, sustainable development,” Xi stressed, as reported by the People’s Daily, the official newspaper of the ruling Communist Party.

“Those who act recklessly and aggressively without regard for reality, or deploy resources without careful consideration, must be held strictly accountable,” he was quoted as saying at the Central Economic Work Conference, which wrapped up last week.

We must always strive to achieve results for the people.

President Xi Jinping

Hard times:

• In November, China Factor reported that Beijing was juicing up the economy with state money to hide a productivity slump and shrinking growth.
• Instead of solving sky-high unemployment among Generation Z or Zoomers, the Party had rolled out sky-high subsidies to prop up the country’s economic numbers.

Delve deeper: By using “self-deception,” Xi’s regime has been able to hide the stench of stagnation amid rampant deflation and anemic domestic demand. Dwindling consumer spending, evaporating household wealth, and falling wages have also created a ‘doom loop’.

Between the lines: “We must always strive to achieve results for the people … focusing on and addressing [their] livelihoods,” Xi told the Central Economic Work Conference. Yet this seems at odds with his current economic policies.

Big picture: There were other contradictions, such as “making technology the engine” of growth. “When it comes to launching new projects, it’s always the same few things: artificial intelligence, computing power, new-energy vehicles,” Xi said.

Bottom line: “Should every province in the country be developing industries in these areas?”

China Factor comment: What this all reveals is the colossal overcapacity that is shaping the world’s second-largest economy. Now that the country is facing a sea of debt, it is using cut-priced, high-tech exports such as electric vehicles to balance the books. Crazy.