For the past quarter-century, China has been run by a well-oiled bureaucracy, with the economy as its number one priority.
It may no longer be the case.
China’s supreme leader, President Xi Jinping, made it clear Sunday at the opening ceremony of the Communist Party’s National Congress that politics and national security are his top priorities. It was reinforced when it took the unusual step of delaying the release of regular, strictly phased data on the Moon’s economic conditions.
“This shows the political dominance of China’s highly capable and institutional technocracy,” said Victor Shih, a political and financial expert on China’s elite at the University of California, San Diego. increase.
“The most likely reason for the delay in the numbers was that the State Council leaders feared the numbers would undermine the winning tone of the party congress,” he added. The State Council is China’s cabinet.
It is extremely rare for a large country to delay the release of such an important economic report. The data included not only China’s economic growth from July to September, but also the country’s factory production, retail sales, fixed asset investment and property prices in September.
Xi, who is expected to run for a third term, is trying to show confidence in China’s prospects. On Monday, China’s economic planning official reiterated the Communist Party’s point about how the Chinese economy is doing, saying it had improved in the last quarter.
But that optimistic message was quickly dashed by news of a delayed release of gross domestic product data. Reporters who called government officials about the release of economic data on Friday and Monday were told they had no information.
Workers contacted again late Monday afternoon only said the release had been postponed indefinitely. On Friday, the government did not release data on imports and exports for September, nor did it say when.
China’s refusal to provide statistics, combined with the haphazard communication of the postponement, has either disrupted parts of the bureaucracy or left China’s economy in a worse state than most people realized. It also raised questions about the reliability of the data.
“It’s a terrible failure,” said Tyce Chan, a Yale University law professor who specializes in comparative legal history and economic history. “I don’t know if they’re massaging the numbers. Even if the numbers need to be massaged, it’s better to do so within a normal timeframe.”
In March, the Chinese government set a growth target of “about 5.5%” for this year. But a Western economist estimates that China’s economy will grow by just over 3% in the third quarter.
Still, it would have been better than the 0.4% growth recorded in the second quarter, when Shanghai was on lockdown for two months to quell the Covid-19 outbreak.
Mr. Xi attaches great importance to social stability and national security, and his actions have often had the side effect of slowing economic growth and employment. Regulators have cracked down on the tech sector, contributing to widespread layoffs among younger employees. Dozens of national private property developers defaulted this year after Beijing discouraged property speculation. The big guys have fled the country. Municipal lockdowns to contain the Covid-19 outbreak have taken a heavy toll.
Questions have long been raised as to whether China’s economic growth figures will swell or even out somewhat from one year to the next. But until recently, China also released more detailed data that allowed us to draw conclusions about the overall health of the economy.
One such indicator is the rising value of new office buildings, railways and other investment projects. But since last year, China has stopped publishing data on inflation in construction costs.
Diana Choileva, chief economist at Enodo Economics, a London consulting firm, said this made it difficult to calculate the true value of new investments. So while the total amount invested is still available, it’s no longer clear what that money is actually buying.
Underlying data were available for China’s international trade, the main driver of growth. However, in the summer the discrepancies began to become apparent.
China’s General Administration of Customs reported that exports to the US and Europe soared through August. However, the number of containers leaving Chinese ports for these destinations remained flat.
The average price that Chinese factories charge wholesalers has changed little. Few economists believe China is making more money from exports through inflation. Despite rising export statistics, the container stagnation has led China to overstate the value of its shipments to customs officials as part of a complex strategy to move money out of China by exporters. coincided with the economic downturn of
There are other indications that the actual export of goods is currently in trouble. Taiwan has trade patterns very similar to mainland China, and on Oct. 7, Taiwan reported an unexpectedly sharp drop in her September imports and exports.
The cost of shipping each container from China to the US or Europe has also dropped significantly over the past year. Further decline in September. According to Container xChange, an online container logistics platform, the cost of loading a container onto an East China ship for delivery to Los Angeles has plummeted by more than half this year so far. It suggests that there are few factories.
Container xChange CEO and Co-Founder Christian Roeloffs said:
Another problem is that when China publishes data, it sometimes doesn’t explain much about how the data is calculated. Derek Scissors, a senior fellow on China and India at the American Enterprise Institute in Washington, said he had previously been unable to get answers from Chinese officials about how certain investment statistics were calculated. said it was done. However, in recent years they have become less willing to discuss their data.
The postponement of Monday’s release of economic data had little visible impact on China’s financial markets on Tuesday. Hong Kong stocks surged as UK tax changes preceded a global rally in stock markets. The stock markets in Shanghai and Shenzhen were little changed as they were more isolated from international events and tightly controlled by Chinese authorities.
However, delays could adversely affect China’s image in financial markets.
“If delays start to become the norm, confidence in official economic data and the professionalism of the Chinese bureaucracy could erode,” said Julian Evans-Pritchard, senior China economist at Capital Economics.