Amid China’s economic downturn, the Chinese Communist Party has strengthened its control over economic information in the name of promoting the “Theory of Bright Economic Future” and “National Security.” Foreign media have pointed out that this move could lead the CCP down the path of the former Soviet Union’s collapse. Scholars believe that the Chinese economy is now in a critical condition.
The recent article in “The Economist” mentioned that a major issue facing the Chinese economy is the strict control of information, highly centralized political control, and a governing culture based on “fear.” Facing a fragile economy, official Chinese data may be distorted to avoid embarrassment at the leadership level.
Despite trying to avoid the fate of the Soviet Union, the reality is that China could follow a similar path, indicating the inefficacy of authoritarian rule.
China’s published economic data has long been questioned for being fabricated by external observers, and discrepancies within their own data are common.
The U.S. Department of the Treasury’s semi-annual foreign exchange report released on June 20, 2023, showed a significant difference in China’s trade surplus figures reported by customs compared to the National Bureau of Statistics. The discrepancy was equivalent to over 1% of China’s GDP. The U.S. Treasury called for further explanation from the Chinese authorities.
In June 2019, the U.S. confirmed its own calculations, reporting a trade deficit with China of nearly $420 billion in 2018. However, China claimed that the trade deficit was only over $150 billion. The gap between the two figures amounted to a staggering $270 billion.
China has banned various economic data that could destabilize the CCP regime, such as land sales, foreign exchange reserves, and bond transactions, causing concerns among outsiders.
China’s important academic database, the China National Knowledge Infrastructure, restricted access for overseas subscribers starting from April 1, 2022.
“The Wall Street Journal” reported in April 2023 that under Xi Jinping’s emphasis on national security, access to crucial databases for overseas users was restricted or cut off, including widely used data by analysts like Refinitiv. Additionally, the CCP had also targeted the local office of Credit Suisse that provided professional consulting services.
In March 2024, a longstanding practice of the CCP’s annual “Two Sessions” premier press conference was canceled, signaling further tightening of information control.
Since the implementation of the new National Intelligence Law on July 1 last year, the previously behind-the-scenes Chinese National Security department has become more involved in issues related to “economic security,” claiming that some individuals were maliciously undermining the country’s financial security.
Following the lifting of pandemic restrictions, China hoped for an economic resurgence and continued to emphasize the “Theory of Bright Economic Future,” silencing dissenting voices. However, the harsh financial reality has made maintaining stability through propaganda seem out of control. In the first half of this year, the CCP’s financial struggles were evident through reports of scrutinizing tax revenues and unconventional revenue sources, along with increased penalties and the resumption of tolls even on non-express highways.
In February this year, economist Xu Chenggang compared China’s current political and economic situation to that of the Soviet Union.
Professor Xu mentioned that China’s current economic state resembles that of the Soviet Union in the 1970s. Although a collapse is unlikely in the short term without severe mistakes, the disconnect between the economies of developed countries and China is growing, with China’s industrial chains shifting overseas at an accelerated pace. If China’s economy were to collapse in the coming years, due to its size, the global impact could be greater than that of the dissolution of the Soviet Union and Eastern European bloc.
Currently, the Chinese Communist Party leadership seems to be making more serious errors.
Taiwanese scholar Song Guocheng, in an article in the Taiwanese media “Up Media” on September 7 this year, stated that Xi Jinping is squeezing the survival and development conditions of the “old productive forces” with the “New Quality Production System” established through “Maoist Economic Movements.” China’s attempts to dominate foreign markets through low-cost dumping strategies have been met with restrictions from various countries. This strategy of prioritizing “national prestige economy” and the predatory policy of “exploiting neighbors” will inevitably stifle the “daily life economy.”
Guocheng believes that China’s economy is now in a critical condition, best described in eight words – “deeply bottomless, with remedies proving ineffective.”