The official announcement from the Chinese Communist Party revealed that the economic growth rate for the first quarter of 2024 was 5.3%, exceeding expectations. However, the general public does not feel the heat of the economy. The hashtag “How difficult is it to find a job at age 35” on Weibo has resonated with many ordinary Chinese people.
According to Bloomberg senior journalist Shuli Ren, the economic data from China is confusing, especially for ordinary Chinese people who witness the stagnation of the economy every day.
According to data released by the National Bureau of Statistics of China on Tuesday, the average annual economic growth rate for the first quarter was 5.3%, comfortably surpassing expectations and the “around 5%” target set during the Two Sessions.
Accusations of the Chinese Communist Party falsifying economic expansion statistics have existed for decades. However, the actual economic situation in China is far from what is indicated by the official figures, as reported by ordinary Chinese households, companies, and even tax officials.
The parent company of Uniqlo, Xunxiao, stated that for the first half of the fiscal year ending on February 29, revenue growth from mainland China, Hong Kong, and Taiwan was only 12%, significantly lower compared to its operations in the United States and Europe.
Xunxiao’s Chief Financial Officer Takeshi Okazaki stated last week that Chinese consumers are tightening their wallets and becoming more cautious in their spending choices.
According to the latest Urban Depositor Survey conducted by the People’s Bank of China, by the end of 2023, only 9.5% of respondents indicated a positive outlook for job prospects. Social media platform WeChat is filled with the hashtag “How difficult is it to find a job at age 35,” with netizens sharing stories of economic downturn, layoffs, and the challenges of finding jobs or starting businesses on their own.
Household savings increased by 8.6 trillion yuan in the first quarter, indicating that residents are reluctant to spend money. Some banks have even halted long-term fixed income products to guarantee profits.
The ChiNext 2000 index, representing small and medium-sized enterprises, has dropped by 20% this year.
Meanwhile, as of February, government fiscal revenue has decreased by 2.3% compared to the same period last year.
The Wall Street Journal’s analysis of China’s first-quarter GDP data focuses on the economic structure and reveals an imbalanced recovery primarily driven by the manufacturing sector. Investment, consumption, and exports are lagging, with the 5.3% growth primarily driven by manufacturing.
Driven by strong exports and investments in new energy, the manufacturing sector has become the primary engine of China’s economic growth, achieving a growth rate of 6.4%. However, the upgrade of high-end industries cannot replace the past dominance of the real estate sector, which helped China overcome economic downturns. At its peak, the real estate industry contributed about a quarter of China’s economic growth.
The appealing GDP figures largely stem from increased inventory numbers among manufacturers. According to data from the National Bureau of Statistics of China, as of February, inventories have increased by 6.8% year-on-year, showing an uptick from the end of 2023. This suggests that companies may sell products from their inventory in the future, which could pressure China’s GDP figures later this year.
“This explains the current dilemma of China’s economy – the Chinese Communist Party knowingly boosts GDP figures by adding surplus products, despite weak consumer demand. The Wall Street Journal reveals a harsh reality: the CCP prioritizes GDP over the actual economy,” a netizen wrote on social media platform X.
The Wall Street Journal points out that with signs of weakness in China’s consumption and real estate markets in the first quarter, many economists believe that Beijing has not done enough to support ordinary families and promote a more balanced recovery.
Compared to the previous two months, the growth momentum in March was weaker, leading people to believe that the Chinese authorities need to implement more stimulus measures to ensure achieving the growth target of around 5% this year.
According to statistics verified by netizens based on the officially announced economic data for the first quarter of 2024 and 2023, China’s economy grew by 3.97% compared to the same period last year. After adjusting for industry weights, China’s nominal economic growth for the first quarter of 2024 was only 4.01%, much lower than the official figure of 5.3%.
Independent commentator Cai Shenkun posted on X on Tuesday, questioning how the Chinese Communist Party calculated the 5.3% annual GDP growth in the first quarter, suggesting that the Statistics Bureau seems to have overlooked common sense.
Shuli Ren pointed out that China’s economy is currently experiencing its longest period of monetary contraction since 1999. According to official CCP data, nominal GDP only increased by 4.2% in the first quarter. Household disposable income grew by 6.2%, which is much lower than the pre-pandemic levels.
There are concerns about whether China’s strong exports, including the electric vehicle supply chain, can be sustained amidst global trade tensions and calls to protect domestic industries. German Chancellor Olaf Scholz and US Treasury Secretary Janet Yellen expressed similar concerns during their recent visits to China, fearing that China’s surplus output could become a global issue.
Additionally, the so-called high-end manufacturing industries heavily supported by the CCP are on the decline. According to official data from the CCP, industrial capacity utilization in China in the first quarter has started to decrease to 73.8%, which is the lowest level recorded after the lift of COVID pandemic restrictions. Sectors such as car manufacturing, electrical machinery, and equipment manufacturing have seen even greater declines in capacity utilization rates.
In the first quarter, domestic car manufacturers in China engaged in price wars, leading to intensified competition and price deflation. Industry leader BYD challenged American electric vehicle giant Tesla, sacrificing profit margins for sales volume, exacerbating price deflation among Chinese manufacturers.
“As China undergoes structural transformation, interpreting the economy and identifying its bottoming-out phase becomes increasingly difficult, especially when the authorities suddenly cease to publish insightful statistical data. This makes it more important than ever for outsiders to scrutinize even the smallest data series,” Shuli Ren cautioned.
Moody’s economic analyst Harry Murphy Cruise stated in a research report on Tuesday that if the Chinese authorities fail to stimulate households to spend, the Chinese economy might find itself in a precarious situation with limited options.