Editorial | Transparency on data best for Beijing and the watching world

The rest of the world anticipates the release of key official indicators on the state of the two biggest economies. Recently that has included the mainland’s unemployment rate for 16-to-24-year-olds. By June it surged to 21.3 per cent, or about four times the country’s overall jobless rate. Everyone was on alert this week for news of the July figure. But Beijing has now discontinued such regular updates pending a review of the statistical methodology. The decision has confounded markets and commentators. The world is in danger of recession amid economic uncertainty and geopolitical tensions. A sudden lack of transparency over such a socially and economically sensitive indicator can only add to negative sentiment.

The psychological factor in investor and consumer confidence should not be underestimated. That is why Jens Eskelund, the new president of the European Chamber of Commerce in China, has referred to a crisis of confidence in China among foreign investors. This would account for investors getting cold feet. Chinese consumers, too, are curbing spending amid worries about economic prospects. The private business sector is also sitting on the sidelines, trapping the economy in a vicious circle.

Apart from policy adjustment, the solution is to restore confidence through transparency about real conditions on the ground, such as the number of young people looking for work. After all, many foreign firms operate on the mainland. It is unhelpful for China to be seen to hide economic conditions from the outside world.

The suspension of youth unemployment updates is a case in point, however justified Beijing’s concerns with the quality of the data. Without a proper explanation that lays concerns to rest, it raises suspicion. Moreover, it calls into question the credibility of China’s data and policy transparency and adds to a crisis of confidence.

That said, Beijing may have reason to review data collection, after criticism in official social media of the value of recent fact-finding exercises by senior officials. Nonetheless, the abrupt opacity has created a regrettable perception, given that China’s current troubles are not just economic but also psychological. In the long run transparency is really the key to solving them. Hopefully, the authorities will soon reveal methodology that reflects reality, instead of creating the perception that China is trying to hide something.

The best assurance of the quality of data is a free flow of information. Even if the Communist Party does not believe in the Western style of releasing information, data sharing and tolerance of critical discussion remain important. Eskelund says, rightly, Beijing can turn the crisis of confidence around with decisive action to increase the transparency of information and data reliability.