Trade War Fallout in China a Mystery; Beijing Stopped Reporting Key Economic Data

Trade War Fallout in China a Mystery; Beijing Stopped Reporting Key Economic Data

Last week, China’s Ministry of Foreign Affairs released a video titled, “Never Kneel Down!” According to Chinese officials, “bowing to a bully [U.S.] is like drinking poison to quench thirst — it only deepens the crisis.”

Despite reports of increasing worker unrest across China caused by “production shutdowns and job cuts” as well as a warning from Goldman Sachs that up to 16 million Chinese may soon be unemployed, Beijing continues to project confidence in its trade war with the U.S.

The Wall Street Journal reported that the Chinese government began withholding critical economic data in 2022, around the same time its economy began to sputter “under the weight of excessive debt, a crumbling real-estate market, and other troubles.”

According to the Journal, the CCP no longer provides data on “hundreds of data points,” including unemployment, the business confidence index, land sales, foreign investment data, and cremations.

Obviously, the lack of this information makes quantifying the trade war’s impact on its economy increasingly difficult.

Of course, even the data the government does release should be viewed with skepticism, as propaganda has been a preferred tool of Chinese authorities for over a century. For example, Beijing reported GDP growth at 5% in 2024 and 5.2% in 2023. Some economists believe they overstated the true results “by as much as 2 to 3 percentage points.”

In a discussion with Fox Business News host Maria Bartiromo last month, China expert Gordon Chang suggested the true rate was closer to zero. Chang said:

We see from the price signals it’s in a deflationary spiral down which is inconsistent with the 5-point growth that they reported for last year.

This is coming at a time when China is having its own 2008. In 2008, they didn’t want to have a recession, so they overstimulated their economy. They’ve accumulated all this debt. They don’t know what to do with it because this debt is internal which means if you try to resolve it, local parties are going to get hurt. They don’t have the political will to do that.

They’ve got their 2008. They’ve got Trump on tariffs. They’ve got deglobalization. This is all hitting China at the same time. And they have no answers for it in Beijing.

China’s lack of transparency has forced analysts to consider alternative indicators to get a read on the country’s economy such as “movie box office revenues, satellite data on the intensity of nighttime lights, the operating rates of cement factories and electricity generation by major power companies. Some parse location data from mapping services run by private companies such as Chinese tech giant Baidu to gauge business activity.”

One economist told the Journal he “assesses the health of China’s services sector by counting news stories about owners of gyms and beauty salons who abruptly close up and skip town with users’ membership fees.”

The article cited a leaked U.S. diplomatic cable from then-Chinese Premier Li Keqiang to the U.S. ambassador in 2007. Li allegedly said GDP data for the province he governed at the time were “man-made and therefore unreliable.” They were “for reference only.” He said that he analyzed “electricity consumption, rail-freight volumes and new bank loans” to get a true read on the economy.

In a separate piece, the Journal reported:

In December, a prominent Chinese economist at state-owned SDIC Securities, Gao Shanwen, said at a conference in Washington that China’s economic growth “might be around 2%” the past few years, adding, “we do not know the true number of China’s real growth figure.”

China’s leader Xi Jinping ordered that Gao be disciplined and he has been banned from speaking publicly for an unspecified period. The Securities Association of China warned brokerages in late December to ensure their economists “play a positive role” in boosting investor confidence.

So, in the end, I suppose it doesn’t matter that China has gone dark on economic data. The country’s lack of transparency at the start of the pandemic proved to the world that the CCP cannot be taken at their word.

Despite China’s facade of confidence, multiple reports in the U.S. media suggest that all is not well in the Land of the Dragon. Last week, CNN reported:

China’s factory activity contracted at its fastest pace in 16 months in April, as steep US tariffs took a heavy toll on the manufacturing sector, adding urgency to Beijing’s efforts to roll out fresh economic stimulus.

The manufacturing Purchasing Managers’ Index (PMI) fell to 49.0 in April [from 50.5], the weakest reading since December 2023, according to data released by the National Bureau of Statistics (NBS) on Wednesday. A reading below 50 signals a contraction.

According to The Daily Caller, “Workers throughout China are flooding the streets in revolt as U.S. President Donald Trump’s tariffs slam the fragile Chinese export economy.”

If these reports are even remotely accurate, data or no data, the CCP will find it increasingly difficult to hide the truth.

Elizabeth writes commentary for Legal Insurrection and The Washington Examiner. She is an academy fellow at The Heritage Foundation. Please follow Elizabeth on LinkedIn or X.

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