BEIJING — In a move that has raised eyebrows around the world, the Chinese government has recently stopped publishing information on youth unemployment, deflation, and other statistics that paint a gloomy picture of China’s economy. The suppression of negative economic data is part of a broader trend that began under President Xi Jinping, reflecting a fundamental weakness in authoritarian regimes.
A Pattern of Suppression
The Chinese government’s decision to withhold economic data is not an isolated incident. Historically, authoritarian regimes have employed similar tactics. East Germany, for example, won praise for including environmental protection in its constitution in 1968 but later classified its environmental data, hiding one of the worst environmental records on the planet.
The Reality Behind the Numbers
Independent estimates of Chinese economic output based on satellite imaging or energy consumption have consistently found lower GDP estimates than the official numbers. The Chinese housing market is caught in a deflationary cycle, and the government-backed steel industry hasn’t been profitable for over a year. Local governments are drowning in debt, with a Goldman Sachs estimate putting the total local-government debt at $13 trillion.
The Impact on Foreign Business
China’s return to a model closer to the older command-and-control posture has led to predictable consequences. Foreign businesses scrambled for alternatives as China remained shut, signaling a shift in priorities from doing business to exerting authority. The Chinese stock market is performing much worse than those of the U.S., Japan, or other developed countries, and direct foreign investment in China in the second quarter of 2023 was down by 89 percent, year on year.
A Warning to the West
The Chinese economic model, once considered a viable alternative to the West’s, is showing signs of failure. The CCP’s control over data and the economy should be a wake-up call to the developing world and to aspiring central planners in the West that free markets, not government control, are the path to prosperity.
Implications for the Future
China’s compromised demographic profile, largely the result of decades of the one-child policy, means it will become old before it becomes rich. Youth unemployment is at 21.3 percent, and there are around 35 million more men than women, leading to a large population of unemployed and unmarriageable men.
The U.S. must remain vigilant against the threats China poses and be sure it has the capabilities to defend itself and its allies in the event of Chinese provocation. The Chinese slowdown should act as a warning to Western companies that betting heavily on assumptions of high levels of Chinese growth in the future is not the way to go.
Table: Key Economic Indicators in China
| Indicator | Status |
|---|---|
| Youth Unemployment | 21.3% (no longer published) |
| GDP Estimates | Lower than official numbers |
| Housing Market | Deflationary cycle |
| Steel Industry | Unprofitable for over a year |
| Local Government Debt | Estimated at $13 trillion |
| Direct Foreign Investment | Down by 89% in Q2 2023 |
This article provides a comprehensive overview of the current economic situation in China, highlighting the suppression of data, the impact on foreign business, and the implications for the future. It serves as a cautionary tale for those who may be tempted to follow China’s economic model and emphasizes the importance of transparency and free markets.