Ratland China says its economy grew 5 percent last year. It probably didn’t.
Now, the government’s final figures for 2024 are in. Lo and behold, the economy grew at exactly 5 percent, not a decimal more or less.
The figure’s precision revives an old question about China: Should its official numbers be believed? The answer is no. Recall the country’s implausibly low official death toll from the covid-19 pandemic. Most official pronouncements call for a dose of skepticism.
The lack of reliable economic data from the world’s second largest economy and most powerful driver of global trade is a problem for the United States and the world. Continuous growth in China, with its huge appetite for commodities and resources, is essential to the global economy. The reverse is also true: A slowdown in China would impose a severe drag on other countries. What’s worrisome is that China might already have entered a period of slowdown, even deflation — and the official figures might amount to a coverup.
China’s National Bureau of Statistics, which supplied the growth number along with other data for the year, has a well-earned reputation for a lack of transparency, inconsistencies in its methodology and discrepancies with other available data. Over the past several years, since President Xi Jinping set a policy of secrecy that shrouds much of the country’s economic data, the country has sharply reduced the number of indicators it uses to arrive at its annual growth number.
A recent data security law makes it difficult for foreign businesses and economists to find even basic economic information, including how much steel China is producing, the size of its coal stockpiles and the movements of container ships in Chinese waters. Such data has been deemed “sensitive” and harmful to national security if released.
What’s more, China’s provincial and local governments, which pass economic data along to central authorities in Beijing, have every incentive to meet the government’s stated growth targets. Many of these localities are awash in hidden debt, due largely to the downturn in property prices and sales. In November, Finance Minister Lan Fo’an said that, as of the end of 2023, China’s local governments had a hidden debt balance of $1.99 trillion, and he introduced a scheme to allow refinancing. Many outside economists suspect that the real debts these jurisdictions carry are many times worse than public figures suggest.
China has attributed its 5 percent growth to a stimulus package released in September, in time for the fourth quarter. But other available indicators, as well as anecdotal evidence, suggest a more mixed economic picture. In 2024, property foreclosures rose sharply from the previous year; some cities saw increases of more than 40 percent. And fewer foreclosed homes have been reselling at auction. Officially, China’s deficit is 4 percent of its gross domestic product, but outside ratings agencies and the International Monetary Fund say the real number could be as high as 13 percent of GDP.
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China’s other big problem — and one likely to increase its deficit spending — is its rapidly aging population and shrinking workforce. At the news conference to announce the 5 percent growth, officials also revealed that the country’s population declined for a third straight year.
Internal skeptics who have questioned China’s official economic numbers have been silenced. At a conference in December, Gao Shanwen of SDIC Securities suggested that China’s stated growth and inflation rates seemed out of whack, and that the real growth rate for the past three years was probably closer to 2 percent. He also said the unemployment rate might be undercounting millions of workers who have either stopped looking for jobs or left urban centers in search of work elsewhere. Afterward, his social media account was blocked, and he was banned from making public comments.
What seems clear is that China’s economy is in the doldrums. And one of its chief economic engines — exports — might be about to take a hit if President Donald Trump imposes across-the-board tariffs on Chinese goods, as he has promised. When Trump imposed tariffs on Chinese goods in his first term, the country’s economy was stronger and better able to withstand a trade war. Today, Chinese officials are still projecting confidence. But this time, their official statements, like the country’s economic data, should be heard with skepticism.
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Editorials represent the views of The Post as an institution, as determined through discussion among members of the Editorial Board, based in the Opinions section and separate from the newsroom.
Members of the Editorial Board: Opinion Editor David Shipley and Deputy Opinion Editor Stephen Stromberg, as well as writers Mary Duenwald, Robert Gebelhoff, James Hohmann, Megan McArdle, Eduardo Porter and Keith B. Richburg.
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