A spate of recent statistics shows that the Chinese economy is faring poorly. The country was supposed to rebound after ditching its draconian “zero Covid” policies, but, after an initial revival, things have gone awry. Earlier this month it slipped into deflation. Key indicators, including industrial production, investment and retail sales, came in well below expectations.
The most concerning figure, however, is the one that we can’t see. The youth unemployment rate was suspended from the monthly economic data release, having reached a record 21.3% in June – suggesting not only that July was grimmer, but that improvement is not expected soon. The government has stopped publishing swathes of statistics in recent years. While there are many reasons for that, and while some may still be released to data firms, it has probably helped to bury some bad news, and makes it harder to cross-reference information. Chinese economists are also under pressure to avoid discussing negative indicators.
Under the Communist party, the economy has always served politics. But the subservience has not been so marked for decades. Tech giants have been reined in and bankers ordered to study Xi Jinping Thought. The question is whether political tightening is affecting not only economic performance, but our knowledge of it.
The primary concern is the domestic audience, not least because the authorities, reluctant to turn to a stimulus, need them to spend. (Strikingly, the National Bureau of Statistics – NBS – stopped publishing a consumer confidence index in April.) But there is also growing hostility towards the outside world. In June, Beijing dramatically expanded the definition of espionage in already sweeping and opaque national security legislation. One key Chinese data provider has begun limiting access for overseas users.
But the leadership has its own blind spots. Li Keqiang, premier until this spring, once told an American diplomat that GDP figures were “man-made” and unreliable. Analysts like to inspect information from the lowest possible levels of bureaucracy because they know that figures are massaged at each stage by officials seeking approbation from superiors.
Close watchers say that the NBS has worked hard to address such issues, meaning that at least some data is probably more accurate than before. But in a system where there is increasing pressure to manifest only “positive energy”, people are frightened to bear bad news. Not only has investigative reporting been muzzled, but reportedly even the “internal reference” service for top officials – secret briefings by journalists and researchers, very different from their published work – is increasingly hampered by self-censorship or editing by gatekeepers along the way. Some analysts suspect that those within the national security system are similarly cautious in passing on information.
“It is a system which is intended to put blinders on the public but also works for decision-makers,” suggests the political scientist Prof Dali Yang. His book Wuhan notes how China carefully created a disease early-warning system after Sars – only for bureaucratic fragmentation and deliberate suppression of negative developments to prevent reports of the Covid-19 outbreak from reaching Beijing in the critical early stages. True, central planners watch the economy much more vigilantly. They unquestionably have a far better view of it than the rest of us. The question is whether their information is good, and fast, enough.
