The May data released by the National Institute of Statistics are worrying and the reaction of international institutes has been immediate. The gloomy post-Covid economy worries a population still marked by lockdowns and protests. Youth unemployment exceeds 20%. The government blocks critical analysis or charts based on official data.
Beijing () – Some of the most important international investment banks in the sector have revised downward their expectations for the growth of China’s gross domestic product (GDP) for 2023. In fact, the latest figures show that the economic recovery after -Covid-19 is still hesitant. According to data released by China’s National Bureau of Statistics, economic growth continues to slow, partly because lower-than-expected retail sales and long-term fixed asset investment. At the same time, the youth unemployment rate reached a record level, standing at 20.8%.
Faced with a generalized crisis, the Chinese authorities apply the ax of censorship – on news, data and infographics that highlight the critical situation – while the Central Bank (the People’s Bank of China, PBOC) decided today to cut two interest rates reference. These are the first reductions in 10 months to support a slower-than-expected post-covid economic recovery. The one-year loan prime rate (LPR) was cut by 10 basis points to 3.55%, while the five-year LPR rate was also cut by the same margin to 4.20% (for the first time since August ). According to some analysts, today’s widely expected cut has been “disappointing” due to its “limited” scope.
Following the May economic results published by the Chinese authorities, on June 16 the major banks cut their estimates for Chinese GDP growth. First of all, the UBS economists lowered their forecasts from 5.7% to 5.2% for the current year, with a downward trend also for 2024, when GDP would stop at +5%. Standard Chartered has lowered its year-on-year growth forecast from 5.8% to 5.4% and also for the second quarter there is a downward forecast from 7% to 5.8%. Experts had previously forecast a rebound between April and June compared to last year, when the Beijing authorities imposed a strict and widespread lockdown that had a strong impact on the Chinese economy and society.
Bank of America lowered its 2023 GDP growth forecast to 5.7% from 6.3%. JPMorgan also cut its full-year outlook to 5.5% from 5.9%, while Nomura lowered its estimate to 5.1% from 5.5%.
In 2022, China registered 3% growth, the lowest in 40 years, and well below the 5.5% target that the government had set early last year. Investments in the real estate sector in the first five months of this year plummeted 7.2%. A bleak picture, and economists fear that the risks in the real estate sector could spread and reach other sectors, leading to an “L-shaped” type of recovery for the next few years (the worst scenario, which has no exit to short term). The unemployment rate for young people between the ages of 16 and 24 reached a record level of 20.8% in May, which represents an additional increase of 0.4% compared to April.
Meanwhile, Beijing has already dropped the ax of censorship on this grim economic news. Last week the Chinese online information portal, Sohu, had published a series of infographics to illustrate the current social problems that emerge from official statistics. The content of the illustrations was obscured almost immediately. For the official narrative, it is unacceptable to show citizens -already affected by the rigid closures imposed by the pandemic- a negative demographic growth, more than 20% youth unemployment, a 20% increase in criminal proceedings against minors suspected of crimes, more 700 million people with a monthly income of less than 2,614 yuan (335 euros), 85 million disabled of various kinds, unemployed with a 31% risk of depression, etc.
Due to the slowdown in the global economy and falling consumption in the US and Europe, Chinese exports plummeted last month. Economists and human rights organizations have pointed out that the number of strikes and protests has been the highest in the last seven years. In the absence of orders, factories try to lay off workers to save costs. The China Labor Bulletin recorded 140 strikes between January and May. Some factories have closed or been unable to pay wages and severance pay, sparking strikes and protests.
