[The Epoch Times, October 11, 2022](The Epoch Times reporters Luo Ya and Cheng Jing interviewed and reported) The 20th National Congress of the Communist Party of China was held on October 16, and the official launched the propaganda machine to build momentum for Xi Jinping’s re-election. Economists are concerned, however, that China’s economy is heading for a full-blown recession. The CCP’s policies over the past decade have stifled the most dynamic parts of the economy. Combined with the recent zero-zero policy, the economy has rapidly deteriorated, surprising the world.
GDP growth has fallen sharply, experts: China’s economic structure is deformed
Ten years ago, China’s economy was growing at an average of 10% per year, but for the past decade, the rate of economic growth has fallen almost every year. According to World Bank data, China’s economic GDP growth rate has gradually declined from 7.9% in 2012 to only 6.8% in 2016, and fell to 6% in 2019, before the outbreak of the CCP virus (COVID-19).
As the world‘s second largest economy, China’s economy is currently in a state of deterioration. From April to June this year, China’s economy expanded by just 0.4 percent from the same period last year, well below the authorities’ initial annual growth target of around 5.5 percent. Growth this year is expected to be lower than elsewhere in Asia for the first time in the past 30 years.
In this regard, Xie Tian, a professor of marketing at the University of South Carolina Aiken School of Business, analyzed the Epoch Times on Tuesday (October 11), first of all, China’s economic structure is a deformed structure, focusing too much on infrastructure, “We all know this real estate problem, Crazy investment has driven up low housing prices, and the CCP’s interest groups have made a lot of money, but at present, the sales volume of real estate is basically halved.”
China’s property market, which contributed about a quarter of economic output over the past decade, is collapsing, he said. Generally speaking, even if the entire real estate declines, Beijing and Shanghai should not be affected. There is always demand in Beijing as the capital city, “but sales in such first-tier cities are also declining, which makes the Chinese economy lose momentum.”
Xie Tian said that China’s economy is growing abnormally and relies too much on borrowing for development. The overall debt may reach 300% to 350%, that is, the combined debt of the government and private enterprises is 300% to 350%. This is very high. Compared to a mature economy like Japan, it is only 150%. The US is now as high as 150% to 200%, but China may be as high as 300%.
In addition, from a political point of view, Xie Tian said that Xi Jinping’s fear or suppression of private enterprises and private capital has caused the country to advance and the people to retreat. But private enterprises are the real driving force of China’s economic growth, and it is also the most crucial factor in capitalism’s saving of China’s socialist economy.
Private enterprises are the driving force of the economy, the CCP continues to suppress
According to the evaluation of the past ten years by the official “China Statistical Yearbook” of the Communist Party of China, “the proportion of private enterprises has increased significantly”, “the proportion of GDP created by the state-owned economy has dropped from about 50% ten years ago to about 30%; The proportion has risen from less than 40% ten years ago to more than 60%.”
However, Xie Tian analyzed that out of the consideration of maintaining the Chinese Communist Party’s regime, Xi Jinping suppressed private enterprises.
Davy Jun Huang, an economist living in the United States, analyzed the serious situation of the country’s advance and the private retreat to The Epoch Times.
By comparing the official “National Economic Operation of State-owned and State-controlled Enterprises” released in 2012 and 2021, the total assets of enterprises under the supervision of the national state-owned assets system in 2021 will reach 259.3 trillion yuan, an increase of 2.6 times compared with the end of 2012; the total operating income is 75554.36 billion yuan yuan, an increase of 78.3% over 2012; total profit of 4516.48 billion yuan, an increase of 106% over 2012; taxes payable 5355.99 billion yuan, an increase of 59.9% over 2012; GDP was 114366.97 billion yuan, an increase of 1.2 times over 2012, The total income is 66.1% of the total GDP. The total tax revenue was 17273.1 billion yuan, accounting for 31%.
David Huang said that it is very clear that the assets of state-owned enterprises have increased by 2.6 times in the past 10 years, while the GDP has only increased by 1.2 times in the same period. .
“Even if detailed and accurate private economic data in China is not available, from the official data on state-owned enterprises, it can be seen that it is obviously ‘national progress’, and the growth rate is much higher than the economic aggregate in the same period.” He said.
Although the profit of state-owned enterprises has increased by 1.06 times, it is still lower than the growth of assets and GDP, which only shows that the growth of profit rate is relatively “loss” due to the inefficiency of management under the monopoly factor.
In terms of tax payment, David Huang said that this is a consideration of the contribution of enterprises to society. State-owned enterprises only increased by 59.9%, and it is still lower than the total income growth. It can be inferred that the so-called “tax reduction and benefiting enterprises” are actually “preferential”. Low-efficiency state-owned enterprises, and state-owned enterprises in the case of market monopoly, policy support, and tax incentives, are far below their proper growth rate. It can be concluded that management efficiency is not generally poor.
Authorities increasingly support state-owned and private enterprises not getting loan funds
In addition, according to a 2020 report by the American think tank Peterson Institute for International Economics (PIIE), in 2013, 35% of non-financial corporate bank credit went to state-owned enterprises, while 57% went to private enterprises; in 2014, 60% went to state-owned enterprises , 34% went to the private sector, and the rest went to foreign capital or joint ventures.
By 2016, distributional imbalances had grown, with 83 percent of credit going to state-owned or state-controlled companies and only 11 percent to private companies.
David Huang said that by analyzing the above economic data, “it is very easy to know that China’s ‘national advance and private retreat’ situation is quite obvious in the past 10 years, and the growing state-owned enterprises have low efficiency, not to mention the comparison with the private sector, even the total GDP growth rate. are far behind.”
He said, it is conceivable, “In recent years, China’s economic growth has basically relied on the contribution of struggling private enterprises, but the economic structure and policies have not encouraged and strengthened private enterprises, but have developed inefficient state-owned enterprises along the way, crowding out private enterprises. space.”
Regarding the government’s neglect of private enterprises, Xie Tian said, “It happened to kill the most prosperous and dynamic part of China’s economy. So the economic speed has dropped so fast, and the whole world has seen it, even if I want to cover it up now Can’t hide it.”
Analysis: Recent zero policy surprises the world as the economy deteriorates rapidly
Hong Hao, chief economist of China’s hedge fund GROW Investment Group (GROW), said in an exclusive interview with Today Weekly that China’s economy will not be able to escape the fate of “very low-speed growth” in the next 10 years. 2% per year” is optimistic.
“Today Weekly” quoted Anthony Saich, director of the East Asia Institute of Harvard Kennedy School of Government, as saying that after losing the support of infrastructure investment, China’s economy may decline faster than most people think. “China’s future GDP Annual growth is about 2% to 3%.”
Xie Tian said, “Now that China’s economic situation has deteriorated to such a degree, the speed of the recession, the deterioration of the economic system, the bursting of the real estate bubble, the speed of this really surprised the whole world.”
He also said that the CCP’s political perversion is also very surprising. For example, the zero-clearing policy, suddenly because of a few test results, can lock up a community or city, which shocked the international community.
Despite Li Keqiang’s constant calls for “stabilizing the economy,” the strict zero-clearing policies in various places have had a severe impact on the economy, with widespread lockdowns in first-tier cities and an almost complete ban on international travelers from entering China. CNN previously said that there were more than 70 cities in China in early September, with about 130 million people under lockdown.
Xie Tian believes that these actions of the CCP, coupled with the deterioration of the overall international situation, the US trade sanctions against the CCP, the rapid withdrawal of foreign capital from China, the transfer of industrial chains and other issues, it can be said that internal and external difficulties are the key factors leading to the continued economic downturn. Basically, the CCP’s economic policy has failed completely.
Bloomberg Economics recently pointed out that due to the long-term impact of the dynamic clearing of the epidemic prevention policy, the decline in investment due to the gradual shrinking of the real estate industry, and the faster-than-expected decline in the fertility rate, it is almost impossible for China’s economic growth rate to exceed 5% in the next decade.
Responsible editor: Li Qiong#