Show us the numbers on China’s economic risks, former finance minister says
- Lou Jiwei says statistics should reflect the negatives and positives of the challenges the country faces
- Rosy statistical picture presented in the data a contrast to the leadership’s tone last week, he says
China’s economic data should reflect more of the country’s major problems rather than just presenting a rosy picture, according to outspoken former finance minister Lou Jiwei.
“There is not enough data showing the negative side,” he said.
“Compare it with the United States, where they have both positive and negative data.”
Lou’s comments came a day after China’s top decision-makers and provincial heads ended a three-day meeting to set the economic priorities for the next year.
In the official statement after the meeting, the leadership warned that the country was facing “threefold pressure” – contraction of demand, supply shocks and weaker expectations.
The statement sounded a strong note of caution that was uncommon in the past and was in contrast to the robust readings of trade and factory activities for last month after both production and consumption figures beat market expectations in October.
Lou, who is now the director of the foreign affairs committee of the Chinese People’s Political Consultative Conference, the country’s top political advisory body, said there were problems with the data.
“Why do we have the judgment of threefold pressure? Where is the data to support it? The numbers are all pretty good,” he said.
He said that for example, publicly available data only showed how many companies had been added in China but did not disclose the number of firms that had vanished.
According to the State Administration for Market Regulation, China had 150 million market entities by November 1, about 100 million more than a decade earlier. The total included enterprises, self-employed operations and rural cooperatives.
“[But] among the 150 million entities, at least 40 million are not active,” Lou said, arguing that some firms had conducted no business since they were registered and others were struggling to maintain operations.
He also said companies were difficult to deregister in China but rather easy to register, inflating the total.
In addition, there was little data about the labour force participation rate in China, although the rate was likely to be declining, Lou said.
According to the National Bureau of Statistics, China’s Gini coefficient dropped to 0.468 in 2020 from a peak of 0.491 in 2008.
But Lou said the indicator did not count some business owners’ consumption within their companies, which kept the reading low.
Lou also argued that the difference in statistical precision between China and the US was reflected in the fiscal policies of the two countries.
While the Biden administration issued stimulus cheques issued to Americans, Chinese authorities said they were transferring trillions of yuan directly to people on lower economic rungs.
“[But] how much we have given? At least what I heard was it was hard to say, we didn’t get much bailout money,” Lou said.
Lou said the NBS was not to be blamed for the insufficient data.
“Which numbers can be counted, which cannot, there are explanations for that,” he said without elaborating.