The Chinese Communist Party (CCP) announced 5.2 percent growth in GDP for 2023 but the credibility of this figure has been widely questioned, with the data considered to lack substantive meaning.
This is because when measured in U.S. dollars, China’s nominal GDP decreased by 0.5 percent for the past year, marking the first negative growth since the significant devaluation of the Renminbi in 1994. It also marks the second consecutive year in which China’s global share in trade has decreased.
In 2021, China’s GDP accounted for 18.3 percent of the global share, reaching a historical high. However, in 2022, the global share started to decline, and by 2023, it further decreased to 16.9 percent.
When China joined the World Trade Organization (WTO) in 2001, its share of global trade was only 4.0 percent, growing 4.6 times by 2021. Now, China’s shrinking share of global trade could signify a potential turning point in its economic growth.
CCP’s Financial Data Lacks Substantive Meaning
Despite China’s assertions that its economy improved in 2023, skepticism surrounds the meaningfulness of the CCP’s reported data.American economist David Huang, speaking to The Epoch Times, highlighted that GDP figures are merely a statistical technique and may not accurately reflect the genuine growth of the Chinese economy. He argued that scrutinizing trade data offers a clearer perspective, noting, “In 2023, both imports and exports in China decreased, aligning with the macroeconomic situation. The overall profitability of society is rapidly declining, which is more evident.”
Mr. Huang said he believes that China’s rapid economic growth of the past 40 years has reached a turning point.
Another American economist, Yu Weixiong, expressed to The Epoch Times that the CCP has a history of fabricating its economic data, which has faced widespread criticism. He stated that the officially announced GDP figures, which the CCP claims stands at 5.2 percent growth, are questionable. In September of the previous year, he stated that China’s GDP growth for the first half of 2023 was reported at 1.8 percent.
Economist Li Hengqing, currently in the United States, conveyed to The Epoch Times that relying on the CCP’s released GDP figures is meaningless as they are artificially created and hold no significance for ordinary Chinese people. He emphasized that genuine economic development should translate into improvements in people’s living standards.
However, he noted a disparity, stating, “The feelings among the people are overwhelmingly: I can’t find a job, my income has decreased compared to before, and an economic harsh winter has arrived.” He argued that the CCP has fabricated its data to show a GDP growth.
The current political and economic situation in China has cast doubt on a bright future outlook for investors. Foreign investment in China has significantly decreased, sending a clear message that international markets have lost faith in the CCP.
Investors Alarmed By Shanghai Composite Index
While foreign capital investment in China are experiencing sharp declines, the domestic securities trading market is also experiencing drastic fluctuations, with stock prices plummeting.On Jan. 15, the People’s Bank of China opted to maintain its benchmark interest rate at 2.5 percent, contrary to investors’ expectations of a rate cut.
On Jan. 18, the CCP officially unveiled economic growth data for 2023, including youth unemployment rates. Despite these figures surpassing market expectations, they failed to bolster Chinese stock prices and instead triggered an overall downturn.
Confidence in the future is pivotal for market stability, particularly in stock market investments. Despite brokerage firms emphasizing positive future trends for China’s economy and stock market, investors and Chinese netizens have expressed skepticism, with some finding the rosy projections “hard to believe.”
Some even humorously suggested, “In an environment where the entire internet is censored, only the stock market is telling the truth. Should we consider censoring the stock market too?”
The economic challenges confronting the CCP prompted Premier Li to lead a sizable official delegation to the Davos Forum, personally advocating for increased global investment in China. He stands as the highest-ranking Chinese official to engage with global business and political elites in Switzerland since CCP leader Xi Jinping attended the forum in 2017.
In November of the preceding year, the World Federation of Major Enterprises conducted a survey involving 35 CEOs of European and American companies operating in China. The results indicated a diminishing confidence in China, with the confidence index dropping from 72 to 54 within six months. Additionally, 40 percent of the respondents expressed intentions to reduce investment in China, and 14 CEOs predicted company layoffs within the next six months.
By the end of September 2023, foreign capital had withdrawn profits from China for six consecutive quarters, totaling over $160 billion.
Japan Stocks Surge as Hong Kong Stocks Decline
When compared to Japan’s surging stocks, the sharp decline in Hong Kong stocks presented a stark contrast to Premier Li’s optimistic stance at the Davos Forum on Jan 16, where he asserted that “choosing the Chinese market is not a risk but an opportunity.”However, the performance of the Chinese stock market painted a pessimistic picture.
In addition to the notable drop in the Shanghai Composite Index, Hong Kong’s stock market experienced a staggering 14 percent decline last year, marking the fourth consecutive year of downturn. The new year did not bring any signs of recovery.
Despite Premier Li’s call for international capital investment in the Chinese market at Davos, Hong Kong stocks faced another round of selling, plunging by 3.7 percent. By Jan. 18, the Hong Kong stock market had lost one-tenth of its market value since the beginning of the year.
For years, Hong Kong served as the gateway for foreign investors to access mainland China, with funds invested in the mainland’s stock market through Hong Kong known as “northbound funds.” However, Hong Kong has now lost its former position and allure as the East’s financial center.
As Japan’s stocks were surging, the Shanghai Stock Exchange enacted a one-hour suspension of exchange-traded funds (ETFs) linked to the Nikkei 225 index for two consecutive days.
Due to the downturn in the Chinese stock market, many investors have redirected their focus to the well-regarded Huaxia Nomura Nikkei 225 ETF, established by the prominent Chinese asset management company Huaxia Fund Management. This led to the trading price of the ETF surpassing the fund’s net asset value per unit, prompting the Shanghai Stock Exchange to temporarily suspend trading of ETF linked to the Nikkei 225 index on Jan. 17 and Jan. 18. This is to warn investors of potential overheating conditions in the market.
Chinese authorities maintain stringent control over capital, limiting opportunities for individual retail investors to purchase Japanese stocks. Therefore, the historic high achieved by Japanese stocks in this instance has captured the attention of Chinese investors, becoming a popular topic of discussion.
Oriental International Securities highlighted that since the start of 2024, with the Japanese stock market accelerating its upward trend, institutions in China with overseas investment qualifications are contemplating the launch of new Japanese stock products.
