Does China Lie About Its Economy?

China announced its massive economy grew by 4.5% in the first quarter. It rebounded from the setback created by the COVID-19 pandemic. However, the data from China’s National Bureau of Statistics may be too good to be true.

Recently, Barron’s covered a study from Yale and China’s Fudan University. The conclusion regarding the GDP data was that “the evidence is very clear that the numbers have been manipulated.”

Another study from the University of Chicago indicated that dictator-controlled countries almost always exaggerated economic results. China was among the nations criticized. (These are the most corrupt countries on Earth.)

A decade ago, a senior official called China’s gross domestic product “man-made.” Reuters covered the statement.

Why lie? One reason is to keep the population and businesses optimistic about prospects. Consumer and business spending tends to trend down or stop when people think they are facing a recession.

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Another reason is global competitiveness. If the Chinese economy is unstoppable, its international business ties will be driven by the near-limitless capacity of China as a trade partner or even provider of capital to sovereign nations.

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China has been projected to overtake the United States as the world’s premier economic power. It has already jumped ahead of Germany and Japan, which held high positions for decades. A growing and stable China is a greater friend or enemy than just a few years ago.

Did China’s GDP grow 4.5% last quarter? Probably not. But who is to prove the number is wrong, even if it seems false? China controls the data, the data collection, and what is done with it behind closed doors.

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