China’s Economy Bounced Back – Or Did It?

    The Chinese economy bounced back strongly in 2021’s first quarter, according to China’s National Bureau of Statistics, but can we trust these numbers?
    The Chinese economy bounced back strongly in 2021’s first quarter, according to China’s National Bureau of Statistics. But can we trust these numbers? Photo: Shutterstock
    Adina-Laura AchimAuthor
      Published   in Macro

    What happened

    The Chinese economy bounced back strongly, growing 18.3 percent in the first quarter of the year, according to China’s National Bureau of Statistics. CNBC highlights the figure as “slightly below expectations of a 19 percent increase.”

    Retail sales grew 34.2 percent in March, topping expectations of 28-percent growth, despite harsh weather. Industrial production increased by a staggering 14.1 percent in March compared to 1.4. percent in the US. Last month, the US missed the 2.7-percent estimated target.

    China’s surveyed urban unemployment rate dropped to 5.3 percent in March, while the unemployment rate for China’s youngest workers (age 16 to 24) remained at 13.6 percent, according to the data.

    The Jing Take

    The Economist appears skeptical of the Chinese boom and the validity and accuracy of the data, indicating that there are “oddities in how GDP is reported.”

    In 2019, Michael Pettis, professor of finance at Peking University’s Guanghua School of Management and a nonresident senior fellow at Carnegie–Tsinghua Center for Global Policies, embraced a similar position. According to Pettis, even highly respected people like Anne Stevenson-Yang, co-founder of J Capital Research, “seem very much to doubt the data and argue that China’s actual growth rate is much lower than the posted numbers, largely because the data is falsified at some level of the collection process.”

    In the opinion of Pettis, “if there is indeed a substantial discrepancy between what the statisticians actually measure and what they are claiming to measure,” it is difficult to forecast “how long the overstatement will continue and how much of an adjustment it will eventually undergo.”

    “From 2012 to 2019, China’s real growth met its targets with suspicious precision,” says The Economist. “But nominal growth often fell short of the pace implied in the budget.”

    Probably there is a certain portion of truth in these theories that China’s growth is inflated. However, the domestic recovery has been strong, and the economic boom seems far from a mirage.

    Undoubtedly, not everyone can enjoy all the advantages of economic growth. China's youth is growing increasingly frustrated with a lack of opportunities, skyrocketing housing prices, growing income inequality, and declining social mobility. Furthermore, millions of migrant workers who moved from the countryside to the cities seem completely forgotten in the new system.

    From all appearances, not everyone benefits equally from China’s economic miracle. And the 60 million children left behind are a testament to the discrepancies that exist in Modern China.

    The Jing Take reports on a piece of the leading news and presents our editorial team’s analysis of the key implications for the luxury industry. In the recurring column, we analyze everything from product drops and mergers to heated debate sprouting on Chinese social media.

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