According to official Communist Party figures, China’s gross national product achieved positive growth of 2.3% in 2020 despite the Epidemic‘s stumble. Some official scholars argue that this reflects the strengths of the socialist system with Chinese characteristics. But there are also scholars within the Chinese system who argue that this model under state control may not be an advantage.
While another wave of the New Crown (CCP virus) epidemic is hitting some Chinese cities, leading to renewed closures and restrictions in many places, the Chinese media is making a big deal out of the fact that China achieved a deficit in economic growth last year.
Is it true that there was positive growth?
According to data released last week by China’s National Bureau of Statistics, China’s gross domestic product totaled more than RMB 101 trillion last year, up 2.3% from the previous year.
This is a full demonstration of the advantages of the socialist system with Chinese characteristics, and the Chinese economy is expected to be the only major economy in the world to achieve positive economic growth, Ning Jizhe, deputy director of the National Development and Reform Commission and head of the National Bureau of Statistics, said at a State Council press conference on Jan. 18.
Wang Ruiqin, a former Chinese private entrepreneur who has always been skeptical of China’s economic data, said bluntly that this data is not true. She analyzed, “The report of the National Bureau of Statistics mentioned that the per capita consumption of the country’s residents actually fell by 4% for the year. He said it was 4%, but it was actually much more than that. In the circle of private entrepreneurs in the north, we all have a first-hand feeling that the economy is actually falling off a cliff, so how can there be a growth of 2.3%?”
But the optimistic figures for China’s economy are not just coming from official Communist Party sources. When the Asian Development Bank published its forecast for China’s economy in 2020 last September, it argued that the economy would grow by 1.8 percent in 2020, not far off from the official Communist Party figures last week.
Derek Scissors, an expert on China’s economy at the American Enterprise Institute (AEI), a Washington think tank, previously suggested in an interview that the ADB’s forecast was actually a compromise based on reality and politics, and that Beijing would eventually report GDP growth of 2.5 percent in 2020.
A victory for the “China model”?
But on top of the optimistic numbers, what raises more concerns is the interpretation of the figure.
Ning Jizhe, head of the National Bureau of Statistics, pointed out last week that China was the first to implement positive economic growth during the 2020 epidemic by controlling the epidemic, resuming production and controlling the size of local debt. The implication is that it was the economic model under state control that worked.
Zheng Xuguang, a Chinese financial analyst who now lives in New York, argues that the wartime system in many parts of China controlled the epidemic and provided the conditions for the economy to restart, but that economic growth relied on the laws of the economy itself, “with manufacturing in major global economies at a standstill, Chinese companies filled the demand.”
He cited the example of “electronic products, for example, electronic products consumed online, computers and so on, and then there are medical supplies, including masks, respirators and so on, where demand has increased just as China’s so-called excess capacity is filling in.”
Data from the National Bureau of Statistics show that total exports of goods reached RMB 179,326 billion for the year 2020, up 4 percent year-on-year.
But on the other side of the coin, analysts also see that the problems inherent in China’s economy are not being solved under the so-called state-controlled model.
Wang Ruiqin was sensitive to the fact that while exports increased, China’s imports fell last year, “it saw a 0.7 percent year-over-year decline, which would indicate poor social consumption.”
The decline in social consumption runs counter to the Chinese government’s repeated emphasis last year on boosting domestic demand and the need to implement a policy of dual international and domestic circulation.
Also according to Hong Kong‘s South China Morning Post, Zhou Tianyong, a professor at the Central Party School, pointed out at a recent video seminar that we should not see the so-called economic growth in the short term as an advantage for the future, and that this state-controlled model may not be an advantage when the economy returns to a normal state.
His main concern is that the mindset of strict control of economic activities that developed in many places during the epidemic will continue in the policy-making process and stifle the dynamism of the economy. And the most directly affected by such control policies in this epidemic is the diverse private economy.
Private enterprises are the key issue
Wang Ruiqin, who has long run private enterprises in the country, told the station that the most worrying thing is China’s private economy, “which has accounted for more than 60 percent of GDP in 2018, but now private enterprises are in a state of complete stagnation and bankruptcy.”
She pointed out that although in recent years, the Chinese government has repeatedly reiterated the importance of private enterprises verbally, but there are not many preferential policies that have really been put into practice, “For private enterprises, the simplest, if you do not have tax cuts, which is the first; no fee reductions, which is the second; third there are many operating constraints, such as private enterprises to pay three Gold, these problems are not Substantial reduction, you say the policy is empty false.”
Zheng Xuguang believes that there are two lines of economic policy of the Chinese government. One is the Xi Jinping-led party line to control the scale of private enterprises, and the other is the line under the leadership of Li Keqiang, “the government system, that is, the system of Li Keqiang, it has been to reduce taxes and deregulation, so these two pieces have been with the power to cancel each other out.”
Wang Ruiqin worriedly told the station that now private enterprises are not a matter of development and growth, but of Life and death.
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