China’s 6.8 Percent GDP Increase Questioned

February 17, 2009 9:04 pm Last Updated: December 14, 2015 10:23 am
Migrant workers returning home at the Longtousi (Dragon Head Temple) train station, Chongqing City, Oct. 29, 2008. Mass factory closings are occurring in China. (The Epoch Times)
Migrant workers returning home at the Longtousi (Dragon Head Temple) train station, Chongqing City, Oct. 29, 2008. Mass factory closings are occurring in China. (The Epoch Times)

According to the Associated Press the recent economic numbers released by the Chinese Communist Party (CCP) regime are suspicious. It noted that the slide of China’s economy is far worse than what was at first indicated. Although published Gross Domestic Product (GDP) numbers for the fourth quarter of last year were still growing at a rate of 0 to 1.5 percent, they hide the real economic situation in China.

The National Bureau of Statistics of China yesterday released comparable GDP analyses. They compared the GDP from the fourth quarter 2007 to that of the fourth quarter 2008 that resulted in 6.8 percent growth. While in Europe Chinese Premier Wen Jiabao spoke about the extent of China’s economic problems. He used the increase of 6.8 percent to give Western countries “confidence, courage, and hope.”

Professor Tian Xie at Drexel University’s LeBow College of Business in Philadelphia told The Epoch Times that China continues to systematically falsify GDP numbers. They continue to deceive the international community and foreign investors. Professor Xie believes that the released 6.8 percent growth rate is like a naked swimmer embarrassed when the tide has gone out. “This is all part of a sophisticated strategy to cheat the world,” said Xie.

China’s Numbers Conceal Full Extent of China’s Crumbling Economy

The Associated Press also pointed out regarding China’s reported GDP growth, that most countries, including the United States and Japan compare GDP month to month or quarter to quarter. China uses an old system of comparing the previous year’s quarterly GDP to the current year. Such comparison hides the real extent of the economic slide in China.

Economists at the Standard Chartered Bank estimate China’s growth rate to be around 1 percent.  Morgan Stanley analysts estimate it to be at 1.5 percent. This is much lower than the CCP reported 15 percent for the first quarter of 2007. According to economists at Merrill Lynch, the sequential growth rate of fourth quarter of 2008 was zero percent.

Sequential Growth Rates Reflect Real Situation

According to Voice of America, international trade and finance analyst Verne Morrison of the U.S. Library of Congress pointed out that Western economists have been using variables from 2008. Economists used data from that period to compare to data from the first quarter of 2009. However, China does not release GDP deviations between sequential quarters. Thus people do not have an actual understanding of what’s happening in China.

Economist Zhuyuan Zheng at Ball State University in Indiana told Radio Free Asia that comparing sequential growth rate month to month, or quarter to quarter, is a much more accurate reflection of the current economic status.

Indicators in China Show That Slide is Far Worse

According to the Associated Press, Merrill Lynch calculated China’s fourth quarter increase as zero percent annually. This follows decreases in Chinese indexes of export, industrial manufacturing, investment, consumption and other indexes.

In addition, China’s energy consumption decreased last year indicating a negative growth in GDP. China’s GDP should not have increased by 6.8 percent when energy consumption decreased. China has not yet provided a reasonable explanation for their figures. They have replied that, “People with this point of view do not have enough understanding of the internal factors in China.”

Morrison said China’s economic slide is far worse than what officials have estimated as the unemployment rate has dramatically increased.

Withdrawal of foreign investments and massive factory closures have driven up rapid unemployment.

Business Closures Accelerate

Business closures were a trend in China before the beginning of the global financial crisis.  According to the Chinese National Development and Reform Commission, 67,000 medium and small enterprises went out of business in the first six months of 2008. China’s business closures increased sharply following the start of the financial crisis.

Businesses have been closing at an alarming rate in the Pearl River Delta. According to the harbor port authority report, from the period of late 2008 and early 2009, nearly 10,000 out of 45,000 companies and factories closed and went out of business in Dongguan City, Shen Zheng City and Guang Zhou City. Millions of people were left without work.

Foreign investment funded companies have found it difficult to escape the same fate. The Federation of Hong Kong Industries (FHKI) reported that production orders have dropped sharply. They predict that it will lead to massive closures of Hong Kong businesses in China.  They have estimated that it will most likely occur in February or March of 2009. Tens of thousands of companies and factories will close, and millions of laborers will be affected.

The CCP’s Fake Economic Analysis

Professor Xie Tian examined recent economic studies completed by Merrill Lynch. According to western variant statistical analyses, China’s economic growth rate converted to annual growth rate in the fourth quarter was close to zero.

Xie said, “A few years ago, international financial experts noted that the CCP was reporting false GDP statistics. The reason for the false statistics was to trick international investors into directing funding in China. The CCP wants to cover up the almost empty Ministry of Finance who has spent huge amounts of money for the regime’s policies of persecution. The reason for local government authorities reporting false statistics was to protect themselves, to use the increased GDP as its foundation for promotion and also to satisfy the requirements of the CCP regime.”

Xie said that in recent years, as international funds have flowed to China, China’s cheap products have stimulated a lopsided export market. China’s real economic situation has never been reported. Facing nearly two trillion U.S. foreign deposits, some people mistakenly believe that the CCP will save the world from its current economic crisis.

“Western investors and governments have again made mistakes. They are unable to recognize the true nature of the Chinese economy,” said Xie.

When the Tide Goes Out, the Naked Swimmer Will be Exposed

The reported economic growth rate during the fourth quarter in 2008 was 6.8 percent. This statistic reported by Beijing is a confession of a “naked swimmer” after the tide goes out. It is also a devious method used to continue to trick investors around the world.

Xie continued, “A People University of China’s expert on unemployment noted that China’s real unemployment rate is above 20 percent instead of five or six percent as reported by the regime. After the Wall Street financial market failure when China’s exports decreased dramatically, foreign investments continued to exit China. The CCP’s tactics of covering up economic realities will eventually lose its effect. We will see more reports on the decline of GDP, climbing unemployment rates, and out-of-control deflation. The 6.8 percent growth rate of the fourth quarter should be a decision made after careful consideration.”

Xie noted that if the Chinese economy were to really continue to grow at a two-digit growth rate, then it would have to contribute to the world economy and open up exports and increase domestic demand. However, this has not happened because the formerly reported booming economy was a fake. Currently, the Chinese regime is trying to “maintain an eight percent growth rate” to avoid a threat to its regime due to the high rate of unemployment. The Chinese regime continues to report false economic data and cover up for its previous lies.  The Chinese regime will not publicize the true economic statistics until it is too late for it to do anything about it.

Xie said, “Ironically, after the tide of world economic failures, like Warren Edward Buffett said, ‘you only find out who is swimming naked when the tide goes out.’ “

Read original article in Chinese.