Renowned economist Gao Shanwen has raised concerns about the accuracy of China’s GDP figures, suggesting they may not fully reflect the nation’s economic reality.
Gao Shanwen, a notable economist and chief economist at SDIC Securities, has suggested that China’s reported GDP numbers might not be entirely accurate. He indicated that the official figures are likely higher than the actual economic growth numbers, projecting GDP growth could realistically be between 3% and 4% over the next three to five years. This assessment contrasts with China’s stated growth targets and reported figures, which have suggested around 5% growth.
This skepticism over the accuracy of China’s official GDP statistics is not new. Speculation has lingered that the figures, especially following the pandemic, might be inflated. Gao Shanwen shared these observations while speaking at the Peterson Institute for International Economics in Washington, DC. He highlighted that his analysis points to an average real GDP growth closer to 2% over the past two or three years, while official figures suggest growth is close to 5%.
China is facing a myriad of economic challenges, including a real estate crisis, soaring youth unemployment rates, and deflationary pressures. The nation has been grappling to revitalize demand following the impacts of the pandemic, compounded by diminishing consumer confidence and a shift towards more frugal spending habits. While exports have remained robust, domestic consumption has not mirrored this trend, resulting in a sluggish economic performance.
Gao also highlighted social demographics in his analysis, painting a picture of a society where the younger population is financially strained, adopting cost-saving measures in their daily lives. The disconnect in consumption growth across various provinces underscores generational economic disparities, with younger demographics notably exhibiting slower consumption growth.
In response to these challenges, China’s leadership has signaled intentions to implement measures aimed at stimulating the economy. Reports from Xinhua indicate discussions on adjusting monetary policies and increasing the budget deficit as strategies to boost consumption and stabilize economic growth. However, these plans, revealed at the Central Economic Work Conference led by Xi Jinping, appear to have left investors unenthused, due in part to their vagueness.
Market reactions to these policy announcements have been largely negative. Following the unveiling of the economic strategies, China’s CSI300 Index and Hong Kong’s Hang Seng Index experienced declines of 1.8% and 1.7%, respectively. Analysts from Nomura have expressed skepticism regarding the sufficiency of these measures, suggesting that more robust interventions may be needed to navigate the unique challenges currently facing China’s economy.
Gao Shanwen’s assessment adds a critical perspective to ongoing debates about China’s economic trajectory. As the country seeks to navigate complex economic challenges, the credibility of its economic data remains a focal point of discussion.
Source: Businessinsider
