During a week when investors are scrutinizing every utterance by officials in Beijing, the government’s unprecedented silence on key economic indicators is one of the clearest signs yet that the Covid Zero policy and politics trumps all else in Xi Jinping’s China.
The government postponed the release of several major economic reports in the past week, including gross domestic product figures, without providing a reason for the delay or a new release time.
The absence of trade data late last week was because top officials who needed to sign off on the figures were attending the Communist Party congress and had to adhere to Covid rules that restricted their movements, according to a person familiar with the matter. That slowed the approval process for the release of the report, the person said, declining to be identified discussing internal matters.
Those restrictions were also likely the reason for the unexplained delay in GDP and other data, which were scheduled for release Tuesday, and puts in doubt the timing of other releases this week, such as the central bank’s release of loan prime rates on Thursday and foreign exchange settlement data scheduled for Friday. Most economists surveyed by Bloomberg forecast the LPRs to remain unchanged as the PBOC has put policy rates on hold over the past two months as the yuan slumped against the dollar.
The People’s Bank of China and the State Administration of Foreign Exchange, which releases the fx settlement data, didn’t immediately respond to faxed questions seeking a response. The General Administration of Customs and the National Bureau of Statistics, which releases GDP, didn’t respond to several calls seeking information.
The unexpected delay of the key economic data underlines how government functions have been downgraded in favor of party meetings, raising questions about the predictability and transparency of information in the world’s second-largest economy. The lack of any official explanation added to investor confusion and prompted speculation Beijing was trying to hide bad data until after the congress ends on the weekend.
“It doesn’t mean that the GDP data are necessarily ‘bad.’ All it means is that lower-level functionaries do not dare to potentially cause a distraction” from the congress,” said Carsten Holz, an economics professor at the Hong Kong University of Science and Technology whose research focus includes the quality of China’s statistics and the economy.
The increased secrecy around the Communist Party has made it harder for China watchers to assess the future direction of policy. This week’s congress is a case in point: although it’s widely expected Xi will continue as leader, it’s unclear who will fill any position below him, including the premier or those in charge of the economy.
Elite politics “was opaque before, but it’s now entirely dark,” Scott Kennedy, a senior adviser at the Washington-based Center for Strategic and International Studies, said recently.
The decision to postpone the release of crucial economic data at the last minute is unprecedented in China: regular economic releases continued even at the height of the original Covid outbreak in 2020 when Wuhan was still locked down, and there was no delay in the data five years ago during the previous party congress.
“Generalized secrecy and lack of transparency increasingly common to Chinese politics and economics erodes trust,” said Jeremy Wallace, an associate professor of government at Cornell University.
Foreign businesses have expressed concern about the increasing uncertainty and direction of policymaking in China. The European Union’s Chamber of Commerce said recently that ideologies such as the dogged pursuit of controlling the Covid virus or the crackdown on the tech sector are increasingly trumping economics. China is now seen as “less predictable, less reliable and less efficient” the chamber said in a report last month.
Joerg Wuttke, the chamber’s president, said Tuesday the data delays are another example of this trend.
The congress has consumed the attention of China’s entire government, with thousands of top officials gathered in Beijing for the event. Government staff at all levels are required to halt their normal work to study in detail Xi’s work report delivered on Sunday.
Delegates are required to follow strict Covid rules, and are being kept in a “closed loop” isolated from the public, according to a government notice. Journalists covering the opening ceremony on Sunday had to undergo at least 48 hours of quarantine. Most of the press events are taking place at a separate venue far from the Great Hall of the People, where delegates are gathered.
Economists surveyed by Bloomberg expect the GDP report to show a rebound in the third quarter to 3.3% after near-zero growth in the April-to-June period. Officials have already signaled a pick-up in growth: a deputy director at the nation’s economic planning department said Monday the economy had “rebounded significantly” in the third quarter, while Premier Li Keqiang told the party congress the economy is improving. – BLOOMBERG