As China watchers call into question Beijing's claimed GDP growth figure for last year, a Japanese financial reporter estimates the world's second-largest economy not only expanded less than reported—but also contracted.
Last month, China's National Bureau of Statistics said the country had surpassed its 5 percent economic target for 2023 with a rate of 5.2 percent GDP growth in inflation-adjusted terms.
This exceeded earlier expectations of the International Monetary Fund and other leading financial institutions. The Chinese economy is beset by a range of problems, including deflation, muted global appetite for exports, and a tumbling stock market.
Subject matter experts have long questioned the veracity of Beijing's economic reports in general, including former Chinese premier Li Keqiang, who in 2007 dismissed his country's economic data as "man-made."
Tamura Hideo, senior staff writer and special commentary writer for Japanese newspaper the Sankei Shimbun, disputed the growth numbers allegedly cooked up by Beijing with his own estimates, published January 22 by the Japan Institute for National Fundamentals.
Newsweek reached out to the Chinese embassy in Washington, D.C. by email for comment.
Tamura centered his estimate of true movement of China's economy on real estate, net exports and residential consumption.
Real estate comprises over 10 percent of China's GDP, he said. However, when considering related factors, such as demand for electrical products, this figure balloons to 30 percent. Factoring in an estimated 16.7 percent drop in property market investment since 2022, Tamura concluded the contraction seen in China's real-estate and related industries may have knocked 5 percent off the government's claimed 5.2 percent growth.
In terms of net export data, Tamura arrived at his estimate by subtracting total imports from total exports. Net exports were down by nearly one-third from January-November year on year. Since this category comprises about 3 percent of China's GDP, Tamura calculated it caused China's GDP to shrink by one percentage point.
The third category, household consumption, makes up almost 40 percent of China's GDP, he said.
This category had to be estimated from retail sales of consumer products since related official data was not released. Tamura inferred it by totaling retail sales of consumer products. Household consumption was thus projected to be 7.2 percent higher last year, boosting the GDP by about 2.8 percent.
Finally, Tamura accounted for China's negative inflation rate of under minus 1 percent, which he said shaved another 2 percent off the GDP.
Overall, the GDP may have shrunk by over 2 percent adjusted for inflation and more than 3 percent unadjusted for inflation, he projected.
He said public investment would be critical to stimulate the economy and reverse this trend but that this is unlikely to occur, given the reluctance of China's leader Xi Jinping to risk further depreciating the renminbi currency through major government expenditures.
"The falsification and concealment of information, symbolized by GDP statistics, cannot help but increase investment risks in China," Tamura warned. He called on Japanese companies still hoping for an economic rebound to "give up on investment in China completely" and return home.
In another article, carried Friday by Japanese news outlet Zakzak, Tamura focused on the role of international investors with much at stake in China in dangerously downplaying the investment risk.
"The international financial world regarding China is full of lies and deception, deflationary recession, negative growth," he wrote. He said the apparent faith Western banks have in Beijing's numbers is obscuring the very real risk and costing them credibility.
Warning the "contraction and decline of the Chinese market will be a serious blow to international financial capital," he cited a January 26 Bloomberg report in which multinational investment bank Citigroup advised China to devalue its currency against Japan's.
The yen's 24 percent drop in value relative to the renminbi over the past four years has contributed to deflation in China, Bloomberg trading strategist Mohammed Apabhai said. He advocated fixing the problem through the currency market, as it's more flexible than adjusting interest rates.
Tamura pointed out Tokyo's undervalued currency is currently giving the world's third largest economy a competitive advantage over the renminbi in manufacturing. Weakening the renminbi against the yen would hypothetically reduce the cost of its exports and shift this advantage back to Beijing.
"That is the true intention of Wall Street in the United States, which has been trying to make a lot of money by investing in China," Tamura said.
However, he said advice like Apabhai's is "based on the premise of the Xi administration's strong power." It would not fix the root of China's economic decline—"the bankruptcy of the [Chinese Communist] party-led economic model."
Uncommon Knowledge
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Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
About the writer
Micah McCartney is a reporter for Newsweek based in Taipei, Taiwan. He covers U.S.-China relations, East Asian and Southeast Asian ... Read more
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