Title: Unraveling the Myths: A Frank Discourse on China
It's no secret among China watchers that Beijing is manipulating its economic growth numbers. This fact was made clear by economist Gao Shanwen at a conference in Washington before Christmas. As the chief economist of the largest state-owned investment holding company, SDIC, Gao dared to question the reliability of the Chinese government's targeted growth data, stating that the real growth rate might have been around 2% in the last few years, significantly lower than the official 5%. Yet, in an authoritarian country like China, speaking the truth about the economic situation can be seen as an act of lese-majesty.
President Xi Jinping was not amused by Gao's comments and reportedly launched an investigation and disciplined the economist. Gao has since been banned from making public appearances, and an event at Nankai University in Tianjin was reportedly canceled due to his statements. This is not the first time doubts have been raised about Beijing's official growth figures; analysts have described them as "pure fantasy" and have relied on harder-to-fake indicators like energy consumption, rail freight volume, and credit issuance to estimate the real performance.
The timing of Gao's criticism could not have been worse for Xi Jinping. China is currently in a dire economic situation, struggling since the COVID pandemic. Ghost cities stand empty across China as a result of the party's construction boom, and household debt is nearing 300% of GDP. China's president has been pulling out all the stops with major economic stimuli, promising a "moderately loose monetary policy" and "proactive fiscal policy." However, the question remains whether this will be enough to avoid a dangerous deflationary spiral.
Gao's criticism has also raised doubts about Xi's ability to handle the current crisis. He joked that Beijing's efforts to boost the economy would be "opportunistic" and questioned whether they would be successful in fulfilling their promised goals. China has been preparing for a frontal attack by the Trump administration, but showing weakness is not an option right now. Gao's criticism in enemy territory is seen as almost akin to high treason in Beijing's eyes.
In summary, Gao Shanwen's challenge to Beijing's economic growth narrative has led to his silencing and professional expulsion. This action reflects the authoritarian nature of the Chinese Communist Party and its willingness to silence dissenting voices to maintain control over the narrative. However, it also highlights the dire economic situation in China, which is struggling to maintain its status as a global economic powerhouse.
Gao's criticism of Beijing's economic growth numbers has led to significant growth constraints for him, as he's banned from public appearances and his events have been cancelled. Despite Beijing's efforts to manipulate growth figures and maintain its economic prowess, the country is currently facing a tough economic growth period, with challenges like ghost cities, high household debt, and a looming deflationary spiral.
