China’s Real Economic Situation Could Be Much Worse Than Official Data Show

China’s Real Economic Situation Could Be Much Worse Than Official Data Show

The Chinese economy has been a topic of concern for many analysts and economists in recent years. With the Chinese Communist Party’s (CCP) increasing lack of transparency and falsification of data, it has become difficult for Western institutions to accurately assess the true state of the Chinese economy. Chinese American economist Davy J. Wong believes that China’s real economic situation could be much worse than what the official data show.

Goldman Sachs and Citigroup, two major financial institutions, have recently scaled down their growth forecast for China this year to 4.7 percent. This comes after the CCP released its sluggish economic data for August. The ruling party’s official annual growth rate of 5 percent for this year is unlikely to be achieved. Wong attributes this discrepancy to the CCP’s inaccurate and unclear data, which lacks details.

The CCP’s National Bureau of Statistics released data on September 14, showing that industrial output increased by 4.5 percent year over year in August, marking the lowest growth rate since March. Retail sales and fixed asset investment growth also fell below expectations. These figures indicate a weakening economy, contrary to the CCP’s claims of positive growth.

Goldman Sachs and Citigroup had previously forecasted higher growth rates for China. Goldman Sachs expected a full-year economic growth rate of 4.9 percent, while Citigroup forecasted growth at 4.8 percent. Mizuho Securities, a Japanese firm, also downgraded China’s economic growth rate to 4.7 percent. These downgrades reflect the challenges that the Chinese economy is currently facing.

The Chinese regime has further obscured China’s economic information by restricting data related to land sales, foreign exchange reserves, and bond trading. The lack of transparency makes it difficult to gauge the withdrawal of foreign capital from China. This has raised concerns among Western institutions and investors.

Wong argues that Western institutions often view China’s economy from the perspective of Western economics, rather than understanding the hidden rules of “the operation of the socialist economy with Chinese characteristics.” He believes that China’s real economic situation could be much worse than what the official data show. He points out that while the state-owned economy is still growing, the private sector is deteriorating. He estimates that China’s current real underemployment rate could be more than 25 percent.

Sun Kuo-hsiang, a professor of international affairs and business at Nanhua University in Taiwan, agrees that China’s economic growth data is often manipulated according to government policies. He suggests that the economic growth numbers released by various provinces may be more symbolic than substantive and cannot reflect the true situation of the Chinese economy.

W. Paul Chiou, a professor at Northeastern University in Boston, emphasizes that China’s economy is heavily reliant on investment rather than private consumption. He notes that China’s private consumption accounts for less than 40 percent of the overall economy, compared to 70 percent in the U.S. economy. Chiou points out that China’s investment and consumer confidence are both declining, indicating a serious state for the economy.

In analyzing China’s development, Chiou believes that it is more meaningful to consider factors that contribute to people’s welfare, such as social security, care for the elderly, and improving the healthcare and education systems. Economic growth alone does not necessarily translate to improved well-being for the Chinese people.

In conclusion, the official data released by the CCP may not accurately reflect the true state of the Chinese economy. Western institutions and analysts are increasingly skeptical of the CCP’s transparency and data accuracy. The downgraded growth forecasts by major financial institutions highlight the challenges faced by the Chinese economy. It is crucial to consider factors beyond economic growth when assessing China’s development and the well-being of its people.