China defends economy with rhetorical Q&A amid slowing growth rate, trade war pressures

Zhou Xin

China’s top economic planning agency has taken an usual approach to defending the state of the domestic economy by asking four rhetorical questions, with the responses aimed at helping to quell rising doubts as well as sell Beijing’s own narrative both at home and abroad.

The National Development and Reform Commission (NDRC), in a statement over the weekend, asked: Is China’s growth really losing steam?; Are foreign businesses fleeing China?; Is China losing its place in the value chain?; and Is China’s official economic data fabricated?

According to the NDRC, the answer to all the four questions is “No”.

China’s gross domestic product (GDP) growth rate slowed to 6 per cent in the third quarter of 2019 amid the trade war with the United States, and Beijing expected to continue modest policy easing next year to maintain an economic growth rate of around 6 per cent.

At present, the impact from business relocation on China’s economic growth, industrial upgrading and employment is controllable

NDRC

For the question on whether foreign businesses are fleeing the country, the agency said that “data and facts” showed China remained as an attractive destination for foreign investors, including US businesses, defying allegations made by American President Donald Trump in July that “thousands” of companies are fleeing China due to his tariffs.

The NDRC also claimed concerns over the massive relocation of Chinese operations to other countries have been exaggerated.

“At present, the impact from business relocation on China’s economic growth, industrial upgrading and employment is controllable,” the agency said.

It also put on a brave face regarding China’s economic slowdown even after the third quarter growth rate slowed to the lowest since records began in 1992.

The NDRC pointed out that a growth rate of 6 per cent was still among the fastest of the world’s major economies and that China is able to keep its growth on track.

“Even if there’s a bit of a drop in the growth rate, the drop will be very modest,” it said.

The planning agency also defended China’s official GDP figures by insisting the growth rate of 6 per cent was accurate.

“Doubts and suspicion about China’s economic data accuracy has never ceased, and a few foreign media even claimed that China’s real economic growth was 3 per cent,” the NDRC said.

If China’s economy had not been growing at a rate of 6 per cent and above, how could China create over 10 million new jobs, how could China keep its urban jobless rate at 5 per cent, and how could China report steady increase in rail cargo and electricity output?

NDRC

Questions have constantly been raised about the accuracy of China’s economic data, and in October, Chicago-based financial service firm Morningstar published a report claiming that the economic growth rate should be closer to 3 per cent in the third quarter.

“If China’s economy had not been growing at a rate of 6 per cent and above, how could China create over 10 million new jobs, how could China keep its urban jobless rate at 5 per cent, and how could China report steady increase in rail cargo and electricity output?” said the agency.

China’s defence of its economic growth rate has intensified amid the slowing economy and a wide-range of growing risks, with many renowned analysts predicting a gloomy economic picture ahead.

It is extremely rare for a nation to face this sort of demographic constraint at the same time as it confronts the middle income trap

Richard Koo

Richard Koo, the chief economist at Nomura Research Institute, wrote in September that China’s economic development now faces the “triple threat” of a rapidly ageing population, the challenge of overcoming the middle income trap and an increasingly hostile US.

“It is extremely rare for a nation to face this sort of demographic constraint at the same time as it confronts the middle income trap,” said Koo, who is an expert renowned for his analysis into the causes of Japan’s decades-long economic stagnation.

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