China’s economy shrunk by 2.6 per cent in the three months to June. - AFP
BEIJING (The Straits Times/Asia News Network): China’s state planner on Monday (Oct 17) painted a rosy picture of the country’s economic recovery from Covid-19, promising a “significant rebound” between July and September.
But, hours later, the assurance from the National Development and Reform Commission (NDRC) was eroded when the authorities delayed – without notice or explanation – the release of a raft of economic data, including the closely watched gross domestic product (GDP) figure for the third quarter that was supposed to be out on Tuesday.
The indefinite delay has fuelled further speculation about the health of the world’s second-largest economy, which has been struggling to grow under the heavy weight of China’s strict Covid-19 approach.
It has also shown that the economy takes a backseat to politics in China, casting a shadow over President Xi Jinping’s speech on Sunday during the opening of the 20th Congress of the Communist Party of China.
Xi, who is almost certain to extend his rule for a norm-breaking third term when the week-long congress ends on Saturday, had reiterated China’s long-held stance that “development is the party’s top priority in governance”.
He had also sought to project confidence in the country’s economic outlook in his speech.
China’s third-quarter results had been highly anticipated – especially after the NDRC’s assurance – given that the country had only grown 0.4 per cent year-on-year in the three months to June due to widespread lockdowns and an extended slump in its property sector.
Zhao Chenxin, NDRC vice-chairman, said at the first news conference after the opening of the Congress that “the economy rebounded significantly in the third quarter, and compared with other countries, China’s economic recovery has been outstanding”.
For now, data – including for property sales, consumer retail figures and statistics on September’s exports and imports – that was supposed to be released last Friday has been delayed.
A new date has not been set, though the dates for the release of October’s figures remain unchanged on the National Bureau of Statistics’ website.
Economists have been split on what the delay says about the latest quarterly results. Some point to the last party congress in 2017, when China released its economic results on schedule, as evidence of how poor the latest figures must be for the authorities to hold off on the release.
In 2017, China’s economy grew 6.8 per cent year-on-year in the third quarter, a day after Xi’s speech at the opening of the 19th National Congress.
Chief economist Clifford Bennett at ACY Securities in Australia told The Straits Times: “China is meticulous with the preparation of its data these days, so allowing the completion of the congress before publishing a bad GDP release would seem the most likely explanation.”
Others have chosen to leave the question open. Nick Marro, lead for global trade at the Economist Intelligence Unit, tweeted on Oct 17: “China delaying its Q3 GDP release says all you need to know about the status of the economy.”
Bennett said the government might be hoping to avoid publicising – during this politically sensitive period – the very real possibility that China might be in a technical recession.
A technical recession is seen as a sign of weak economic conditions – which Beijing has been unwilling to admit – and if not properly managed by policymakers, could lead to a deeper and broader downturn.
China’s economy shrunk by 2.6 per cent in the three months to June, and a second decline quarter-on-quarter will mean the country is in a technical recession, which it managed to avoid even in 2020, at the height of the Covid-19 pandemic.
The country is widely expected to miss its stated target of “around 5.5 per cent” in 2022, with many economists expecting a growth of no more than 3 per cent for all of 2022.
Bruce Pang, chief economist at real estate company Jones Lang Lasalle in Hong Kong, said the delay does not necessarily mean the figures are bad. “Most preliminary economic data pointed to a pick-up in recovery in the third quarter... Authorities want media and the public to concentrate on the key messages delivered by the big event”, he said, referring to China’s party congress.
Iris Pang, chief economist for Greater China at ING Group, agrees that politics has taken precedence over the economy for now.
“The delay suggests that the government believes the 20th Party Congress is the most important thing happening in China right now and would like to avoid other information flows that could create mixed messages,” she said in a research note on Tuesday.
