The propaganda war is set to intensify over China’s real GDP
- Both Beijing and the West will cherry-pick and distort the numbers as their rivalry escalates, so we all need to remain mindful and alert
China’s economy is going down the drain, but that of the United States is doing fine. That seems to be the dominant Western narrative at the moment. The results of the two countries’ stock markets would seem to lend credibility to the story.
Chinese shares have reportedly evaporated US$6 trillion in the past three years, while the S&P 500 has been hitting record after record.
Of course, the connection between the stock market and the “real” economy is often debatable. That has long been so in China, and is increasingly the case in the US.
The so-called Magnificent 7 of Apple, Amazon, Alphabet, Meta, Microsoft, Nvidia and Tesla have been driving the overall market rise. They can do that because, according to a new Deutsche Bank analysis, their combined market cap would make it the second-largest country stock exchange in the entire world! Many other constituent stocks in the S&P have barely moved.
His point is that the US’ GDP rose by 2.5 per cent annually last year, or 3.1 per cent from the last quarter of 2022 to that in 2023, while China’s GDP increased by 5.2 per cent annually. Ross has called the Western narrative “fake news”. I won’t go so far.
Now, I am no economist so I don’t dare argue about the ins and outs of GDP calculations with Ross. I do think his claim about the connection between political propaganda and the mainstream Western media is worthy of serious thought.
Ross was an economic adviser of Ken Livingstone, a former mayor of London sometimes dubbed Red Ken because of his socialist background. Ross was at one time a Trotskyist.
“The overwhelming majority of US and Western journalists continued to spread fake [economic] news. Why?”, he asked in his latest piece.
To return to China, investors need stock market reforms and a good outlook
One answer he offers is “the fact that identical distortions and false information appeared absolutely simultaneously across a very wide range of media makes it clear that undoubtedly US intelligence services were involved in creating it – i.e. part of the misrepresentation and distortions were entirely deliberate and conscious, aimed at disguising the real situation”.
We have certainly seen this kind of Western “united front” media time and again, whether it was the cheerleading for the US invasion of Iraq or the Western proxy war in Ukraine. It’s likely that MI6 and CIA have something to do with the China GDP narrative.
But in my own experience, journalists are as prone to herd mentality as everyone else. When one dominant narrative takes over, we all follow it more or less. Meanwhile in China, there is intense but mostly political pressure on journalists to toe the party line.
So, instead of arguing who or which side is right or whether it’s Chinese propaganda or Western fake news, I say we try to use a more rational approach. For starters, I suggest: 4.8 per cent = 72 / 15 years. (The rule of 72 is the compound-interest shorthand for calculating the number of years for something to double.) That’s roughly the annual growth rate China’s GDP will need to achieve between 2020 and 2035 to reach developed status, the 15-year period on which President Xi Jinping has rested much of his political capital and prestige.
China will have every incentive to make sure the annual growth rate doesn’t fall below that from now until 2035 while the West, especially Washington, will want to intensify an information war against it.
After all, the future size of the Chinese economy may be the ultimate determinant of who will be the next dominant power. Both sides will cherry-pick and distort the numbers. So we all need to be mindful and alert.
