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Xi’s Books

There have been many accusations towards China over the years about the country’s finances. As a command economy with questionable transparency, it is well within the country’s regime’s power to cook its books. And earlier this week, China decided to delay the release of its most recent economic growth figures. China’s National Bureau of Statistics (NBS) did not provide a justification for the delay. While some believe that the reasons were political – President Xi Jinping is expected to obtain a third term at the Communist Party’s congress in Beijing this week – most experts believe the move is even more basic: the numbers simply are not good.

Messages and mixed messages

To combat this prevailing narrative, Zhao Chenxin, the head of a relevant commission, stated that Q3 2022 had “picked up significantly”. At a news conference, he stated, “Globally, China’s economic performance also remains outstanding. Consumer prices have risen modestly, in sharp contrast to the high global inflation, and employment remained generally stable”. Despite these assurances, most are taking this information with a healthy grain of salt. President Xi has doubled down recently on the zero-COVID strategy that has been hampering the Chinese economy. Although the country predicted earlier this year that it might miss its 5.5% annual GDP growth target, the new question is the margin by which it will miss it. Many foreign experts believe it is much closer to the 3% range.

No matter what, it is clear that the Communist Party does not want any distractions from this week’s conference. And economic data – even if it’s not that bad on a global scale – would certainly send mixed messages to the Chinese people and the international business world. Importantly, the NBS was supposed to release a lot of information beyond just GDP, including statistics related to retail sales, property prices, and factory production. What has confused a lot of experts is the fact that China has not always had the most reliable data. For example, China’s customs authority showed that there were sharp increases in exports to the US and Europe in August, yet the actual number of containers leaving the country that month did not go up. So, if China needed to manipulate any of these figures, why did they not do so within the normal time frame? That is the question that the financial world is hoping to have answered in the days or weeks to come. If China stumbles, there will be financial fallout throughout the world.