COP 21. Xi Jinping. Photo Benjamin Géminel.
The economic numbers produced by China’s statistical bureau have been questioned by analysts outside the country for decades. Now, a Chinese economist has questioned the country’s numbers, and the response from Xi Jinping was not a good one. Lingling Wei reports for The Wall Street Journal:
At a Washington forum last month, a prominent Chinese economist raised doubts about Beijing’s economic management and said China’s economy might have grown at less than half the roughly 5% pace flaunted by authorities.
When Xi Jinping found out, he was furious.
According to people familiar with the matter, the Chinese leader ordered an investigation of Gao Shanwen, chief economist at state-owned SDIC Securities, who has frequently advised the government on economic and financial policies. Xi then ordered authorities to discipline him.
Two comments that Gao made at the forum, hosted jointly by the Peterson Institute for International Economics and a Chinese think tank, angered Xi, the people said.
One questioned the reliability of Chinese growth data. “We do not know the true number of China’s real growth figure,” Gao said at the Dec. 12 event, whose webcast is available on the Peterson Institute’s website and on YouTube. “My own speculation is that in the past two to three years, the real [gross domestic product growth] number on average might be around 2% even though the official number is close to 5%.”
Xi was further incensed to learn that Gao cast doubt regarding Beijing’s ability to take the steps needed to bolster growth.
“Their efforts to stimulate the economy will be very opportunistic,” Gao said at the forum. “In the end, I don’t think they can very confidently deliver what they have promised.”
Xi’s order led to a ban on Gao speaking publicly for an unspecified period, said the people familiar with the matter. For now, he has been allowed to keep his job, they said.
The leader’s reaction to Gao’s criticism highlights the deep sensitivities in Beijing over economic troubles that have mounted on Xi’s watch.
Beijing is trying to quell worries that China is plunging into a prolonged downturn. The country’s economy is being dragged down by a property meltdown that has wiped out $18 trillion in household wealth, a buildup of debt that is approaching 300% of GDP, and severe industrial overcapacity that risks a deflationary spiral.
The gathering gloom also hampers Beijing’s efforts to project strength and prepare to confront head-on tariffs and other threats from the incoming Trump administration.
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