China’s Economic Recovery – Does It Make Sense?

China shocked the world last month when the government, seemingly out of nowhere, claimed to be the first major state to show signs of growth over the summer period. The data released by Beijing had analysts and officials alike scratching their heads, wondering how the superpower could be in such a position of strength in comparison to The West. 2020 has been a brutal year economically, with China arguably suffering the most of any nation in the first two quarters. And yet, numbers emanating from the Communist Party point to a remarkable turnaround, with growth figures of 4.9% reported between July and September.

But for all of the optimism and envious eyes currently being cast upon the state, things may not quite be as they seem. The issue surrounds the validity of such rapid growth, as many experts worry that the figures, while impressive, are slightly hollow – and aren’t indicative of true economic growth. Data manipulation, as well as a perceived overreliance upon investment rather than consumption, are both two clear warnings signs that we’re all being played by the nations proficient propaganda machine.

Nick Marro, a lead analyst on global trade at the Economist Intelligence Unit, predicts that the figures mooted by China show a shuffling of data to artificially inflate GDP growth – despite there being no tangible indicators that true growth has taken place. “The Chinese Statistical agency is opaque about their methodology, and unless we get more details about their adjustments, we’ll never know the full story. But there does seem to be evidence of a targeted adjustment to help list that headline figure”, Marro stated.

“The September figures were smoothed by quietly altering the historic basis of comparison”, he continued. “Basically, some of the numbers from September 2019 were re-apportioned into October of that year, in order to lower the comparison base. That led to a statistical distortion where the September 2020 growth figures might’ve been artificially inflated.”

According to Marro, the difference in growth rate was not huge, but it does certainly appear as though Beijing wants to make its GDP growth appear as healthy, and as mighty as is feasibly possible. “The bigger implication is that the investment landscape might be more fragile than the official numbers suggest heading into the last quarter of 2020. That’s perhaps the bigger risk for companies to be aware of”, he concluded. If you would like to review the hottest Online casinos from India then Casino Zone is the place to do it.

While some of the nations official statistics may have been massaged somewhat, there is tangible, real-world proof of China’s recovery – even if it’s not quite as big as many are making it out to be. As Bloomberg reports, China Evergrande Group, the world’s most indebted real estate company with $120 billion in liabilities, rallied the most since March, as shareholders signalled their confidence in the nationwide property developer.

Once again, this is arguably an indication of investment and market confidence, with a distinct lack of real-world growth in the form of a consumer boom. But at a time of unprecedented financial peril, it does at least signal that there is light at the end of the tunnel for Xi Jinping’s government.

The biggest problem for China is not likely to be what happens this year but is instead what the traumatic nature of 2020 does to its economy long-term. The ravages of COVID, as well as the never-ending U.S-China trade war, has spooked several Western companies that would traditionally rely on Chinese labour to assemble their products. Fearing what might happen in the eventuality of a stand-off between the world’s two superpowers, states such as India are being lined up to - in essence - become “the new China”.

Regardless of China’s current growth, the next few months and years could go a long way towards recalibrating the world as we know it. Keeping his country on track in its quest to become the world’s biggest economy will be Xi’s biggest test to date.

This article does not necessarily reflect the opinions of the editors or management of EconoTimes