For the past quarter century, China has been ruled by a well-oiled government bureaucracy that, predictably, has focused on the economy as its top priority.
That can’t be anymore.
Xi Jinping, China’s supreme leader, made it clear that politics and national security come first at the opening of the Communist Party’s National Congress on Sunday, a biannual gathering of the country’s ruling elite. That point was reinforced the next day when Beijing took the unusual step of delaying a routine, tightly staged release of data on how the economy had performed over the past three months.
“It shows the primacy of politics in influencing the very competent, institutional technocracy that China has,” said Victor Shih, a specialist in Chinese elite politics and finance at the University of California, San Diego.
“The most likely reason for the delay in the figures was that the heads of the State Council feared the figures would spoil the triumphant tone of the party congress,” he added. The State Council is China’s cabinet.
It is extremely rare for a major economy to delay the release of such an important economic report. The data included not only China’s economic growth from July to September, but also the country’s factory production, retail sales, fixed asset investment and house prices for September.
Mr Xi, who is expected to claim a third term in power, has tried to express confidence in China’s prospects. On Monday, a Chinese economic planning official echoed the Communist Party’s talking points about how well China’s economy is doing, saying it had improved in the most recent quarter.
However, this optimistic message was quickly undermined by news of the delayed release of gross domestic product data and how the delay was being managed. Reporters who called government officials Friday and Monday about the release were told they had no information.
When contacted again late Monday afternoon, workers said only that the release had been postponed indefinitely. The National Bureau of Statistics still hasn’t explained the delay or announced a new date. On Friday, the government also failed to release data on exports and imports for September and did not say when it would do so.
China’s refusal to provide statistics, coupled with the arbitrary way the shifts were communicated, suggested that either some bureaucracy was in disarray or that China’s economy was in worse shape than most people had assumed. It also raised questions about the reliability of the data.
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“This is a terrible mistake,” said Taisu Zhang, a Yale University law professor who specializes in comparative legal and economic history. “I don’t know if they’re massaging the numbers — even if they have to massage the numbers, it would be better to massage them within the usual timeframe.”
In March, Beijing set itself the goal of growing “around 5.5 percent” this year. Still, Western economists have estimated that China’s economy grew just over 3 percent in the third quarter.
That would still have been better than the 0.4 percent growth seen in the second quarter, when Shanghai went into two months of lockdown to stamp out a Covid-19 outbreak.
Mr. Xi has placed great emphasis on social stability and national security, often with policies that have had the side effect of slowing economic growth and jobs. Regulators have cracked down on the tech sector, contributing to widespread layoffs among young workers. Dozens of the country’s private property developers have defaulted on debt this year after Beijing discouraged property speculation. Tycoons have fled the country. Municipal lockdowns to halt outbreaks of Covid-19 have taken a heavy toll.
The question has long been raised as to whether China’s economic growth statistics could be inflated or smoothed out slightly from one year to the next. But until recently, China had also released more detailed data that allowed inferences to be drawn about the overall health of the economy.
One such measure is the increasing value of new office complexes, railway lines and other investment projects. But last year, China stopped releasing data on construction cost inflation.
That made it difficult to calculate the true value of the new investments, said Diana Choyleva, chief economist at Enodo Economics, a London-based consultancy. So while all the money invested is still available, it’s no longer clear what that money will buy.
Underlying data was available on China’s international trade, its key growth engine. In the course of the summer, however, increasing inconsistencies became clear.
China’s General Administration of Customs reported a sharp increase in exports to the United States and Europe in August. But the number of containers leaving Chinese ports for these destinations has been flat.
The average prices that factories in China charge wholesalers have changed little. Few economists believe that inflation makes China more money from exports. The plateau in containers, even as export statistics rise, is consistent with earlier periods of economic weakness in China, as exporters exaggerate the value of their shipments to customs officials as part of complex strategies to move money out of China.
There are other signs that actual exports of goods are now in trouble. Taiwan has trading patterns very similar to mainland China, and on October 7 Taiwan reported a sharp, unexpected drop in its September imports and exports.
The cost of shipping each container from China to the United States or Europe has also fallen sharply over the past year. In September it went down significantly further. According to Container xChange, an online platform for container logistics, the cost of loading a container onto a ship in east China for delivery to Los Angeles has fallen by more than half this year. This indicates that only a few factories offer space on board ships.
“The retailers and the larger buyers or shippers are more cautious about the demand outlook and are ordering less,” said Christian Roeloffs, CEO and co-founder of Container xChange.
Another problem is that even when China releases data, it now sometimes provides less explanation of how the data is calculated. Derek Scissors, a senior fellow specializing in China and India at the American Enterprise Institute in Washington, said he was previously able to get answers from Chinese officials about how certain investment statistics were calculated. But in recent years, they are no longer willing to discuss their data.
Monday’s postponement of the release of economic data had little discernible impact on Chinese financial markets on Tuesday. Share prices rose sharply in Hong Kong as a change in UK tax policy preceded a global stock market rally. Little changed in the Shanghai and Shenzhen stock markets, which are more isolated from international events and also heavily managed by Chinese authorities.
But delays can corrode China’s image in financial markets.
“If delays are a regular occurrence,” said Julian Evans-Pritchard, senior China economist at Capital Economics, “then it could undermine confidence in official economic data and the professionalism of the Chinese bureaucracy.”
Li You contributed to the research.