Unreliable statistics, mounting debt, and nonperforming loans are just a few underlying characteristics of China’s economy.
For years, China has tried its best to hide and shadow its unsustainable economic practices from its people and from the world. Research suggests that it has been overstating gross domestic product numbers for the past decade.
It’s important to acknowledge that Beijing does release huge amounts of data. However, when it comes to statistics, there’s a big difference between quality and quantity.
Isn’t it time to find out what’s really going on in China?
On June 30, The Heritage Foundation released its inaugural “China Transparency Report.” (The Daily Signal is the news outlet of The Heritage Foundation).
This 120-page assessment analyzes China’s transparency on eight different issues, ranging from the economy to human rights. The report rates economic transparency from the Chinese government at only 4 out of 10. The overall rating isn’t much better at 5 out of 10.
Unfortunately, recent external shocks, including the COVID-19 pandemic, have led President Xi Jinping and the Chinese Communist Party to adopt a more authoritarian approach.
The government has interfered by harshly cracking down on protests, collecting private data, and surveilling the country. Unambiguously, the Chinese Communist Party has made it clear that authoritarianism is here to stay.
The economy is no exception. Instead of making structural changes aimed at forwarding progress, Beijing turns to more command and control to keep businesses afloat.
Over the past 30 years, China’s economic development has been quite impressive. The country’s 2001 entry into the World Trade Organization allowed it unprecedented opportunities for foreign trade. Global trade revolutionized Chinese markets, lifting millions out of poverty. But despite this and other seemingly positive reforms, China has never let go of its tight grip on the economy.
In fact, more than ever, businesses can only operate in China if the Chinese Communist Party approves, and only to further its goals.
Heritage’s recently released annual Index of Economic Freedom measures economic governance in key areas related to economic growth and prosperity. It highlighted, once again, that China remains a “mostly unfree” economy.
The economic freedom that does exist in the world’s second-largest economy is severely lacking in depth and breadth across the country. China’s economic freedom has barely grown over the past 27 years.
Worse, various policies that China’s leaders have enacted for more than a decade now are compounding the very problems they are meant to fix. The Chinese Communist Party has been attached to capitalizing on greater political control, even at the cost of long-term economic development.
Kay C. James, Heritage’s president, says in her preface of the “China Transparency Report”:
The U.S. now faces a different China from a decade ago. The emboldened leadership in Beijing has become increasingly aggressive, and in many ways, it is a threat to America, its interests, and its role in the world… With greater transparency on Chinese issues, the U.S. can create policies to keep the CCP [Chinese Communist Party] in check, to neutralize its various threats, and to build a better future for America, for the world, and perhaps even for the Chinese people.
Washington, D.C., must better understand China’s economy and expose its grave lack of transparency and accountability, particularly as U.S. policymakers and other like-minded partners around the world focus on the challenges China poses more than ever.
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