China silences prominent economist over unflattering analysis

A prominent Chinese economist was censored after his outspoken remarks about China's poor economic growth, The Wall Street Journal reported.

News week contacted the Chinese Foreign Ministry for comment by email.

Why it matters

The world's second-largest economy continues to face headwinds since Beijing's strict pandemic measures ended in late 2022, including a housing crisis, lukewarm consumer confidence and high youth unemployment.

Many economists, including former Chinese Premier Li Keqiang, have questioned the accuracy of China's growth figures. However, publicly questioning these figures remains risky, as critics of Xi's policies are often subject to investigation, detention or censorship.

What you need to know

Gao Shanwen, chief economist at SDIC Securities and a former central bank official, questioned the accuracy of official reports on China's gross domestic product, a subject of long-standing skepticism among many analysts.

Last month, the veteran economist suggested at an event that the country's GDP figures could be overestimated by several percentage points, angering the Chinese president. The Wall Street Journal » reported, citing people familiar with the matter.

Although Gao would have retained his position, according to sources, he is prohibited from making public statements for an indefinite period.

“We don’t know the true number of China’s real growth,” Gao said at the Dec. 12 event hosted by a Chinese think tank and the Peterson Institute for International Economics.

In a report released last month, Gao compared China's economic situation to other countries that have experienced crises in their real estate sectors, noting that these countries' economies had contracted by an average of -7%. over three years.

China's GDP growth fell to 3% in 2022 amid prolonged COVID-19 lockdowns. Gao pointed to inconsistencies in government data, estimating a “cumulative overestimate of 10 percentage points,” which he said corresponds to a significant loss of 47 million jobs in urban areas.

Gao added that the figures would add up if the GDP expansion figures were revised down to 2 percent.

What people say

Gao Shanwen, chief economist at SDIC Securities, said at the December 12 event:: “My own hypothesis is that over the last two or three years the actual number [for GDP growth] on average this could be around 2 percent, although the official figure is close to 5 percent. »

Mary Gallagher, dean of the Keough School of Global Affairs at the University of Notre Dame, wrote in World Politics Review on December 31:: “The economy's immediate problem boils down to anemic growth. Necessary limits on investment-led expansion and the real estate sector have cut off traditional avenues of growth, while Chinese household consumption has not not made the comeback that many expected with the end of Beijing’s draconian “Zero COVID” policy.

What happens next

China has set a GDP growth target of around 5 percent after announcing 5.2 percent growth for 2023.

In his New Year speech, Xi praised the success of recent policies to boost growth and pledged to take more proactive measures in the future.

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