The Chinese Communist Party’s official economic growth target for this year was originally set at around 5%, but signs are increasingly indicating that this target may be difficult to achieve. In a rare move, state media recently published a commentary stating that being a hero is not based solely on GDP (Gross Domestic Product), and that reaching a growth rate slightly above or below 5% would be acceptable. Analysts believe that the CCP is aware that it cannot meet the economic growth target, so it is lowering societal expectations and may introduce new measurement standards to mask the economic reality.
The Xinhua News Agency, the official state-run press agency of China, published a commentary on December 3 titled “How to View Economic Growth – A Q&A on China’s Current Economy,” stating that “GDP emphasizes the concept of quantity and cannot fully reflect the quality and efficiency of economic activities,” and that the current focus of China’s economy is on achieving qualitative improvements and reasonable growth rates, rather than simply relying on GDP as a measure of success.
The article stated that achieving economic growth slightly above or below 5% would be acceptable. The CCP’s mouthpiece, the People’s Daily, reprinted this article on December 4. However, the People’s Daily had previously published an article last month stating that with policy effects becoming more apparent, China’s economy will show a trend of high, medium-low, and back up, with growing confidence in achieving the economic growth target of around 5% for the full year.
Since last year, Chinese leader Xi Jinping and Politburo Standing Committee member in charge of propaganda, Cai Qi, have persistently emphasized the narrative of the “Bright Economic Outlook.” Over the past year, many Chinese economic scholars have been censored for expressing views that are not aligned with the official stance. The voluntary release of a conciliatory statement by the authorities has garnered attention.
David Huang, an economic scholar based in the United States, told Epoch Times that the CCP’s adjustment in propaganda has its own unique background and reasons. For a long time, especially since China’s accession to the World Trade Organization in 2001, the GDP growth rate has been seen as the legitimacy of Beijing’s governance and a core indicator highlighting the superiority of the so-called socialist system. However, given the current domestic and international challenges, it may be difficult to achieve this core indicator.
“One important reason is that after so-called reform and opening up by the CCP, real growth has been reliant on exports. With the deterioration and tension in international trade relations in recent years, China’s export business has drastically contracted. Therefore, achieving high growth targets is no longer possible,” he said.
Huang believes that the current strategy of changing the narrative is aimed at lowering societal expectations and correcting past exaggerations in order to steer public opinion in a new direction.
Tian Xie, a professor at the Moore School of Business at the University of South Carolina, expressed that the CCP is adjusting its rhetoric because its previous lies are no longer sustainable; the whole world knows that the Chinese economy is in decline, and the CCP can no longer deceive the people. Thus, the CCP is finding a way to backtrack. The CCP had previously claimed to maintain 5% economic growth, but had also promised 6%, 7%, or 8%.
“Why can’t they achieve it? It’s simple. The problem of unemployment in China is very severe. The official figure acknowledges only a youth unemployment rate in the low teens, but in reality, Chinese scholars estimate it to be as high as 47%, close to 50%. With such a high unemployment rate, economic growth is impossible,” he explained.
Tian further analyzed that, for instance, the GDP growth rate in the United States is only around 2%, and the unemployment rate in the US is only 3%. It means that a 3% unemployment rate can support a 2% economic growth. You cannot claim that your economy is growing at 5% or 6%, with such high unemployment rates, where people are not working, who is creating this GDP?
Huang mentioned that observers globally, since around 2015, have viewed a 5% growth rate as a psychological threshold for the expectation of China’s economic growth. Beijing wants to create the illusion that it is making proactive adjustments, rather than passive adjustments due to economic downturns.
The National Bureau of Statistics of China released economic data on October 18, showing that China’s GDP grew by 4.6% year-on-year in the third quarter, slightly lower than the previous quarter’s 4.7%. China’s economy grew by 4.8% year-on-year in the first three quarters of this year, just staying within the official target range of around 5% for the full year.
According to a report by Reuters on Wednesday, the Chinese government set a growth target of around 5% for 2024 in March of this year, but the ongoing real estate crisis and massive local government debt have weakened China’s economic momentum.
Nevertheless, the aforementioned Xinhua article claimed, “Whether in terms of quantity or momentum, the economic performance in the first three quarters has laid a solid foundation for achieving the full-year target.”
Tian stated that the 5% growth target set for this year itself is questionable and systematically manipulated. For example, the real economic figures may have been inflated, with some scholars believing that the actual numbers may have been inflated by as much as 10%, which means that the stated 5% growth rate may actually be negative 5%. “Even the former Chinese Premier, Li Keqiang, didn’t believe it. When he was the Communist Party Secretary of Liaoning Province, he didn’t believe it, leading to the so-called ‘Keqiang Index.’ He used transportation, electricity production, and other indicators to estimate China’s economy.”
Tian mentioned that China’s data can be estimated using other figures, such as import and export data, especially when compared with Europe and the United States, which can provide a glimpse of China’s actual economic situation.
Huang said that China’s GDP figures have long been questioned by the international community for being manipulated, with discrepancies between the total figures of the 31 provinces and cities and the national statistical data. Issues such as hidden local government debts have distorted the true picture of economic growth. For instance, China has temporarily boosted economic growth by investing in infrastructure projects that do not have long-term benefits for society. Also, the way China calculates its unemployment rate differs from the rest of the world, counting even a few hours of work a month as employment. Observers can infer China’s economic situation from the data provided by the government, such as changes in household savings rates.
In addition to the series of articles published by Xinhua titled “A Q&A on China’s Current Economy,” the People’s Daily also published an article today (5th) titled “How to View the Boost to Domestic Demand.” These articles may be serving as a warm-up to the Central Economic Work Conference.
Bloomberg reported on December 3 that the Central Economic Work Conference of the CCP will be held next Wednesday (December 11). According to Chinese media Interface News, according to convention, the Central Economic Work Conference will be held soon to analyze the current economic situation and set the tone for macro policies in 2025.
Since late September, several stimulus measures have been announced by the authorities, including interest rate cuts and the introduction of a 1 trillion yuan debt-to-equity plan, but their effects have been limited. As local governments receiving debt funds, they are more likely to use them to address high-interest short-term debts rather than injecting funds directly into the economy. Market sentiment has turned negative, with observers still watching to see if the authorities will roll out actual measures to rescue the economy.
Moreover, the Chinese authorities may adjust policies to cope with potential tariff increases on Chinese goods by President Trump after taking office.
The aforementioned Xinhua article stated that individual countries’ containment pressures on China may escalate, possibly pointing to the United States.
Tian mentioned, “Trump has made it very clear that he will impose high tariffs on Chinese products. The CCP is facing a very severe reality—economic recession, coupled with attacks from the United States. The CCP must discuss some countermeasures, but it actually cannot come up with any.”
“Previous meetings of the Political Bureau and the Central Economic Work Conference have been held many times, but they haven’t come up with any policies. But it is apparent that they must consider measures in response to the impending trade war and tariff war with the US. That’s all,” he said.
Huang stated that overall, the CCP’s change in propaganda direction may indicate a lowering of the goal of high economic growth as a reflection of the superiority of the social system, and then introducing new, more difficult-to-measure standards. These may include concepts such as green development, technological innovation, improvement of livelihoods, and happiness indices, redefining the notion of economic growth. Additionally, there may be an attempt to find a new balance between structural reforms and preventing risks, making minor and limited adjustments.
Interestingly, the Xinhua article mentioned previously has already claimed, “Compared with speed, when evaluating whether the economy is good or not, we need to look at whether the development momentum is strong, whether the economic structure is reasonable, whether innovation is driving stronger, whether development is more coordinated, whether the environmental foundation is more robust, whether the level of openness is higher…” The article also mentioned that in the first three quarters, their economic development “incorporating green elements” has improved, and so on.
Tian said, “The CCP is now sending out signals that maybe at the Central Economic Work Conference, they may introduce other indicators to measure economic development. The CCP is finding a way to give itself a step down and continue to cover up the truth about its economy.”