[Beijing Diary] China Is Being Suspected

China is under suspicion. Even economic indicators, which serve as the minimum information and a margin of trust for evaluating and diagnosing a country, are now being questioned. Last year's GDP growth rate of 5.2% in China is a representative example. Local media celebrated the achievement of the government target (around 5.0%), but externally, there is skepticism.

Japan's Nihon Keizai Shimbun raised objections by converting China's economic size into dollars. Nihon Keizai pointed out that "China's nominal GDP in dollar terms decreased by 0.5% compared to the previous year," marking the first decline in GDP in 29 years since 1994.

[Image source=Reuters Yonhap News]

U.S. Bloomberg News expressed more specific doubts. Bloomberg reported, "Last year, overall investment in China was largely stagnant, which means the GDP growth rate is significantly overstated," citing Logan Wright, director at Rhodium Group, who estimated the actual figure to be around 1.5%. Although China's National Bureau of Statistics announced that fixed asset investment (FAI) increased by 3% nominally last year, the year-on-year change in total investment (50.3 trillion yuan, approximately 9310.53 trillion won) could not be estimated due to problems found during the investigation process, which was also criticized.

It also pointed out that skepticism and doubts about China-originated statistics intensified since 2022, when China's economic growth rate reached 3% despite large-scale lockdowns. Furthermore, citing a forthcoming paper from China Economic Review, it was noted that estimates based on nighttime light data suggest a GDP growth rate of minus 3.9% in 2022. The growth rate for 2022 was only 0.9%, and due to the base effect, last year's growth was 7.2%, not 5.2%, according to Fathom Consulting's figures.

A major foreign media outlet wrote in a column that "economists consider Beijing's official economic data only as a reference," adding, "China invests huge resources in the National Bureau of Statistics, but transparency has declined, damaging trust in the results." It continued, "Since Xi Jinping became leader in 2013, the number of economic indicators provided by institutions has significantly decreased," emphasizing that "observers have become more skeptical of China's official GDP figures."

The youth unemployment rate (ages 16?24) in China, which had been temporarily suspended from publication since July last year, returned from 21.3% in June to 14.9% in December after six months. Of course, there is a seemingly reasonable explanation that the criteria were adjusted by excluding students from the statistics. However, in Korea, when statistical standards change, the previous figures under the old criteria are also published for a while to maintain continuity and aid understanding. Such consideration was absent in this announcement.

A head of a Chinese regional office of a Korean public enterprise supporting companies' overseas expansion recently said, "We received a notice from Chinese authorities to reduce dispatched personnel," lamenting, "While outwardly emphasizing openness and improvement of investment conditions, they are effectively pressuring even legitimate activities." One of the most toxic elements in relationships is 'doubt.' Misunderstandings can be reversed, but suspicion born from repeated lies breaks relationships. It should be remembered that restoring past trust requires an immense amount of time and effort.