Taps Coogan – December 18th, 2020
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Leland Miller, CEO of China Beige Book International and long time China watcher, recently spoke with Yahoo Finance to discuss China’s economic recovery. Mr. Leland pushes back against official Chinese GDP forecasts which point to strong year-over-year growth despite the Covid pandemic.
Mr. Leland points to a trick that China has used to boost its GDP figures over the years: revising down its past economic figures to make present growth look higher. Specifically, Mr. Leland notes that China’s GDP is likely to only be positive in 2020 because it has revised down its growth figures from 2019. Nonetheless, he notes that China has witnessed a strong recovery this year, albeit less so for small and medium sized enterprises (SMEs).
“We’ve been surveying thousands and thousands of firms throughout the year in China and repeatedly they’re telling us that things are getting better. They’re getting better by month, by quarter. There’s a pretty impressive recovery going on but they’re not improving on year. We’re not back to where we were in 2019. Beyond that, there are reasons to look inside official data to understand why we are not seeing an on-year recovery.
If you look at the headline figures, you will see a big number, whether it’s 5% or 6% or whatever it might be for fourth quarter GDP, suggesting that you’ve got this great GDP growth that shows tremendous gains over 2019. The reality is that’s not what is actually happening. You get into the numbers like fixed asset investment, or… retail sales, and you can see some downward revisions that make the numbers look much more attractive. If you are constantly taking the 2019 numbers and moving them down, you are always going to see improvement… The numbers being used are not what people think they are…”
With hundreds of millions of citizens still living on $5 or less a day and a dismal human rights record, economic growth is central to the CCP’s social-contract. Growth, or its illusion, will be maintained at all costs.
There is more to the interview, so enjoy it above.
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