The Chinese official Friday (January 17) released the economic data for 2024, claiming that the economy grew at a rate of about 5%. However, many Chinese people believe the economy is actually in a state of recession, and this number does not reflect real life.
For a long time, economists and even senior Chinese officials have questioned the accuracy of the authorities’ GDP data. These statistics are released annually by the National Bureau of Statistics and always “accurately” align with the government’s set annual targets.
For most Chinese people, the official shining data starkly contrasts with real life. Whether it’s bank employees, government officials, or those in the food and ride-sharing industries, all unanimously express feeling the pressures of economic recession.
The Financial Times reported that a ride-sharing driver in Beijing stated that the official claim of 5% economic growth year after year is not felt by the people. “For ordinary people, let me tell you, it’s just about earning enough money to not starve,” he said. “Don’t even mention any growth or development.”
An economist at a university in Beijing told the Financial Times that many scholars believe the official GDP growth figures are inaccurate, with a margin of error of up to plus or minus two percentage points, and in the past two years, this distortion has become even greater.
This economist, who preferred to remain anonymous, said: “The middle class is experiencing unemployment for the first time. This has never happened in the 45 years of reform and opening up.”
However, the Chinese authorities prohibit economic practitioners from questioning official data and discussing negative economic trends, making economic topics increasingly sensitive in China.
Analysts from the US think tank Rongding Group stated in a research report that China’s economic growth in 2024 may only be half of the official target, ranging from 2.4% to 2.8%.
Local Wright, a partner at Rongding, bluntly stated, “If China’s economy were truly growing at 5%, the issue of overcapacity wouldn’t be so pressing.”
A loan officer at a bank in Anhui Province mentioned that the value of the loan portfolio he manages dropped by 20% this year. During a recent business trip to Zhejiang Province, he discovered that a factory belonging to a client employed 1,700 workers a year ago, but now only has 1,100 employees.
“More and more people are choosing to pay off their loans early,” said the loan officer, because people find reducing debt more cost-effective than investing.
To stabilize consumption, the Chinese authorities gave a significant raise to government officials for the first time in ten years. However, the private sector, including financial regulatory institutions, announced significant pay cuts.
Jiaqi Zhang, a 25-year-old investment banker in Beijing, told Reuters that the situation in 2024 is a recession, with salary cuts that were implemented in 2023 now being reduced again, totaling a 30% pay cut.
His equity financing department cut eight to nine people due to “insufficient projects.” “There is a sense of unease in the company,” Mr. Zhang said, noting that he has reduced his clothing purchases and dining out, always prepared to resign but currently has nowhere else to go.
Even state-owned enterprises have not been spared. An employee of a state-owned conglomerate in southern Fujian Province stated that the Beijing authorities required the conglomerate to expand investments to support the economy in the fourth quarter of last year. In response, the company prematurely completed a 25-year project expenditure.
However, at the same time, the company reduced employee salaries – by over 20% compared to three years ago. “I was promoted at the beginning of 2024, but my monthly salary is still 1,000 yuan less than in 2023,” said the employee.
Private enterprises are also finding it tough. The owner of an advertising printing company in Beijing, surnamed Hao, told the Financial Times that he doesn’t know where the official economic growth claims come from.
“The authorities can say whatever they want, turning a blind eye to reality,” Mr. Hao said. “2024 was the worst year in my over twenty years of operating in this industry.”
His advertising printing revenue dropped by 40% last year, causing him to plan not to return to his hometown in Shandong for the New Year this year. “At my age, I’m supposed to give red envelopes to the younger generation when going back, but I simply don’t have the money,” he said.