Analyst claims China is hiding true economic growth data

As China watchers question the Chinese government’s claims about last year’s GDP growth rate, one Japanese economic reporter says the world’s second-largest economy not only grew slower than reported, but also contracted. It is estimated that

China’s National Bureau of Statistics announced last month that China’s inflation-adjusted GDP growth rate was 5.2%, exceeding the economic target of 5% for 2023.

This exceeded the initial expectations of the International Monetary Fund and other major financial institutions. China’s economy is beset by a variety of problems, including deflation, a slowdown in global export appetite, and a stock market crash.

Experts have long questioned the veracity of Chinese government economic reports in general, including former Chinese Premier Li Keqiang, who dismissed China’s economic statistics as “artificial” in 2007.

Hideo Tamura, Japanese newspaper senior staff writer and special commentator Sankei Shimbunrefuted the growth rate figures released by the National Institute of Fundamental Research on January 22, which are said to have been fabricated by the Chinese government based on its own estimates.

newsweek The Chinese embassy in Washington, D.C., was contacted for comment via email.

Mr. Tamura estimated the actual movements of the Chinese economy, focusing on real estate, net exports, and housing consumption.

According to him, real estate accounts for more than 10% of China’s GDP. However, this figure rises to his 30% when related factors such as demand for electrical goods are taken into account. Taking into account the estimated 16.7% decline in real estate market investment from 2022 onwards, Tamura said the contraction seen in China’s real estate and related industries could have pushed down the government’s claimed 5.2% growth rate by 5%. It was concluded that there is.

Regarding net export data, Tamura arrived at his estimate by subtracting total imports from total exports. Net exports fell by nearly a third in the January-November period from a year earlier. Since this category accounts for about 3 percent of China’s GDP, Tamura calculated that this shrank China’s GDP by 1 percentage point.

The third category, household consumption, accounts for almost 40% of China’s GDP, he said.

This category had to be extrapolated from retail sales of consumer products as no relevant official data has been published. Mr. Tamura made the estimate by aggregating retail sales of consumer products. Household consumption was therefore expected to increase by 7.2% last year, pushing up GDP by about 2.8%.

Finally, Mr. Tamura explained that China’s negative inflation rate was less than -1%, which he said pushed down GDP by an additional 2%.

Overall, he predicted, GDP could have contracted by more than 2% after adjusting for inflation, and by more than 3% before adjusting for inflation.

He said public investment is essential to stimulate the economy and reverse this trend, given Chinese leader Xi Jinping’s reluctance to risk further weakening the renminbi through large-scale government spending. , said that the possibility of that happening was low.

Tamura warned, “The falsification and concealment of information, as symbolized by GDP statistics, cannot help but increase the risks of investing in China.” He called on Japanese companies hoping for an economic recovery to “completely give up on investing in China” and return to their home countries.

In a separate article published by Japanese news outlet Zakuzak on Friday, Tamura focused on the role international investors, who are taking on big risks in China, are dangerously downplaying investment risks.

“The international financial community regarding China is full of lies, deceit, deflationary recession, and negative growth,” he wrote. He said Western banks’ apparent reliance on Chinese government numbers obscured very real risks and undermined their credibility.

“The contraction and decline of the Chinese market will be a serious blow to international financial capital,” he warned, adding that the multinational investment bank Citigroup had recommended that China devalue its currency against the Japanese currency. Citing a January 26 Bloomberg report.

Mohamed Apabay, a trading strategist at Bloomberg, said the 24% decline in the value of the yen against the yuan over the past four years contributed to China’s deflation. He advocated solving the problem through a more flexible exchange market that would adjust interest rates.

Tamura noted that the undervaluation of the Tokyo currency currently gives the world’s third-largest economy a competitive advantage against the renminbi in manufacturing. A weaker renminbi against the yen would hypothetically reduce export costs and return this advantage to Beijing.

Mr. Tamura said, “This is the true intention of Wall Street in the United States, which has been profiteering from investments in China.”

But he said advice like Apabai’s “is premised on the Xi government’s great power.” It will not solve the root cause of China’s economic decline, that is, “national bankruptcy.” [Chinese Communist] Party-led economic model. ”