One of China’s economic myths – sustained growth?

The Chinese Communist Party tempts and binds the world with its economy. But is the Chinese economy really strong, beautiful and seductive? Can the Chinese market really attract the world? Is China really a world economic powerhouse? Is China’s economic explosion an opportunity or a threat to the world? And so on. In this regard, I would like to present my views on the sustainability of China’s economic growth.

Why is the target for economic growth in 2021 only “above 6%”?

Let’s start with the present. According to the figures from the National Bureau of Statistics of the Communist Party of China, the GDP in the first quarter of this year was 24,931 billion yuan, up 18.3% year-on-year, which may seem glamorous, but this figure is based on a 6.8% contraction of GDP in the same period in 2020, which is not “stunning” at all; moreover. Moreover, the first quarter growth was only 0.6% YoY, lower than the revised 3.2% growth rate in the previous three months, and also missed the expected 1.5% growth target, so the first quarter was not a good opening for the Chinese economy. But the Chinese Communist Party tends to “tell half the story,” deliberately giving people the wrong impression.

In fact, the Chinese authorities are well aware of China’s economic difficulties, which is why the government’s work report set this year’s GDP growth rate at more than 6 percent, rather than higher (almost all provinces’ growth targets are above 6.5 percent). According to the IMF’s World Economic Outlook report released in April, the IMF expects the global economy to grow by 6 percent and 4.4 percent in 2021 and 2022, respectively, so China’s growth target of “more than 6 percent” is not outstanding and is not in line with the Chinese Communist Party’s claim that China’s growth target of “more than 6 percent” is not very impressive, and it is also not in harmony with the high profile of the Chinese Communist Party that “China is the first to emerge from the epidemic” and “China’s economy is leading the recovery from the global epidemic. So, never mind the propaganda about how China’s economy is doing, the suffering involved, the CCP is not afraid to say ah.

China becomes the number one economy ahead of schedule?

Then again, by 2020. In the face of the epidemic, China’s economy is growing at an annual rate of 2.3%, and is said to be the only major economy with positive growth. Note that it is not all economies, because at least it is not as high as Taiwan’s 2.98% (which is the first time in 30 years that Taiwan has surpassed the mainland in terms of annual economic growth rate).

China’s GDP exceeds 100 trillion yuan for the first time in 2020, accounting for more than 17% of the world, equivalent to about 70% of the United States. Many domestic and international research institutions, such as the Center for Economics and Business Research (CEBR), a British think tank, believe that China will overtake the U.S. as the world’s largest economy by 2028, five years earlier than previously predicted due to a new crown epidemic that has made the recovery in China and the U.S. significantly contrasting.

However, such views ignore or seriously underestimate two key factors. First, official Communist Party data are not credible, the true state of the epidemic in China is not known, and the likelihood of a second outbreak in China and its severity are the biggest variables, making China’s future, including its economy, highly unstable. Although we do not want to see it, the current tsunami of the Indian epidemic is indeed a mirror for China to wake up.

Second, China’s long-term rapid economic growth (GDP in 2017 was 33.5 times higher than in 1978 at constant prices, with an average annual growth rate of 9.5%, doubling every 8 years on average) is unsustainable and is already deteriorating. In Xi Jinping’s “new era”, from 2013 to 2019, the annual GDP growth rates are 7.8%, 7.4%, 7.0%, 6.8%, 6.9%, 6.7%, and 6.1%, respectively. (The main cause of China’s continuous economic growth decline is not external factors or cyclical factors, but rather institutional problems and reform failures, see the author’s article “China’s economy is in chaos and the CCP is helpless.

The above are official figures, but it is generally believed that the actual situation in China is much worse. For example, the mainland economist Xiang Songzuo revealed in a speech at the end of 2018 that a research group of a very important institution, which publishes a report internally, has reported that so far (in 2018) China’s GDP growth figure is 1.67%, while another measurement shows a negative figure. Another example is that on October 21, 2019, then US President Donald Trump, at a cabinet meeting, disagreed with the figure announced by the Chinese Communist Party (6% y/y GDP growth in the third quarter of 2019), saying that “it’s likely to be in the negative”.


Although the predictions of the book “China’s Impending Collapse” published in 2001 were not successful, some of the inherent flaws of the Chinese economy, as pointed out by the “Chinese economic collapse” theorists, do exist objectively and cannot be ignored; on the other hand, some of the views of the “Chinese economic miracle” theorists have been disproved by reality. On the other hand, some of the views of the “Chinese economic miracle” theorists have been disproved by reality (for example, Lin Yifu claimed at the “China Economic Outlook Forum 2014”, among others, that China’s economy will be able to maintain 8% growth for the next 20 years).

Since the late 1990s, China’s economy has been “moving forward with illness”. In reality, this “disease” is incurable and “dead” (otherwise it would not be getting worse); but when will it break out and how long will it survive? Because of the intertwining of various circumstances, it is still difficult to judge.

In general, the Chinese economy is a typical “giant with feet of clay”. It is not so big that it will not fall, but once it falls, no one can save it. Therefore, if the Chinese economy collapses, it would be a disaster for the world economy.

Under such circumstances, it is reasonable and necessary for both the Chinese and the world to remain cautious and careful about the Chinese economy and to make appropriate arrangements.