When Xi Jinping learned of this, he was furious.
The Chinese leader has ordered an investigation into Gao Xiangwen, chief economist at state-owned SDIC Securities, who has frequently advised the government on economic and financial policy, the people said. Mr. Xi then ordered authorities to discipline them.
Two statements made by Mr. Gao at a forum co-hosted by the Peterson Institute for International Economics and a Chinese think tank infuriated Mr. Xi, according to people familiar with the matter.
Some voices questioned the reliability of China’s growth data. “We don’t know the real number of China’s real growth rate,” Gao said at a Dec. 12 event, a webcast of which can be viewed on the Peterson Institute’s website and YouTube. Even though the official figure is closer to 5%, the real (gross domestic product growth) figure is likely to be around 2% on average. ”
Mr. Xi was further infuriated by Mr. Gao’s questioning of China’s ability to take the necessary steps to boost growth.
“Their efforts to stimulate the economy will be very opportunistic,” Gao said at the forum. “At the end of the day, I don’t think they will be able to achieve what they confidently promised.” Ta.
Mr. Gao has been prohibited from speaking publicly for an unspecified period under President Xi’s order, according to a person familiar with the matter. For now, he is allowed to continue working, they said.
The leader’s response to Mr. Gao’s criticism underscores Beijing’s deep sensitivity to economic issues overseen by Mr. Xi.
The Chinese government is trying to allay concerns that the country is in a long-term recession. The country’s economy is hobbled by a real estate meltdown that wiped out $18 trillion in household wealth, debt accumulation approaching 300% of GDP, and severe industrial overcapacity that risks a deflationary spiral.
The growing cloud is also hampering Beijing’s efforts to project strength and prepare to confront tariffs and other threats head-on from the incoming Trump administration.
In recent months, authorities have sought to stamp out negative talk about the economic situation.
Last year, Zhu Hengpeng, a senior economist at one of China’s leading think tanks, was investigated, detained and dismissed from his post for allegedly making comments in a private chat group criticizing President Xi’s economic management. The Journal reported in September. The Journal reported that the remarks included a veiled reference to the leader’s death.
Other targets range from businessmen, bankers to academics, many of whom have doubts about the leadership or are seen as not aligning with the wishes of those in power.
The campaign accelerated after Gao’s silence.
Late last month, the China Securities Association, an industry watchdog group overseen by China’s top securities regulator, issued a warning to securities firms and fund managers to help economists and analysts interpret government policy and boost investor confidence. He warned them to play an active role. You can be fired if you submit it to the association.
At a meeting this weekend, President Xi Jinping, Tsai Qi, called on propaganda directors across the country to “strengthen economic propaganda and expectation management” and stamp out negative commentary about the economy.
The China Securities Regulatory Commission said the securities association’s directive was mainly aimed at “chief economists who make unprofessional and irresponsible statements,” but answered other questions, such as the involvement of Gao and Xi. “The rest are false,” he said, without elaborating.
SDIC Securities did not respond to questions.
An early sign that Gao was in trouble came last month when an event hosted by China’s Nankai University where he was scheduled to be a guest speaker was canceled. The Jan. 11 event was canceled due to “guest of honor Gao Xiangwen’s personal schedule,” according to a website promoting the program and a message sent to attendees and seen by Barron’s. .
In his New Year’s speech on December 31, President Xi stated that the Chinese economy was “on an upward trajectory” and sought to boost confidence in the Chinese economy, while also acknowledging concerns about a trade war with the incoming Trump administration. However, China has vowed to continue the trade war. Overcoming challenges from the “external environment”.
This did little to give investors confidence that the Chinese government was determined to address the country’s economic woes. Chinese stocks and bonds have fallen since the beginning of the year. The benchmark CSI 300 stock index fell 2.9% on January 2, the steepest decline on the first day of trading this year in nearly a decade. Yields on China’s 10-year government bonds have hit a new low following a sharp decline last year.
Growth-promoting measures launched since September, such as interest rate cuts and debt swaps for local governments, have had a limited impact on the revival of activity. Leaders then promised bolder action at a December meeting, but many economists and analysts doubt that these promises aimed at boosting spending will go far enough.
Gao’s remarks in Washington were privately shared by many economists and analysts in China and abroad.
The punishment of Gao and other outspoken economists is a blow to investors trying to assess the true state of China’s increasingly uncertain market.
The Chinese government’s official GDP statistics have long been viewed with skepticism, even within China’s domestic policymaking community. Instead of relying on GDP numbers to measure the health of the economy, China’s late Premier Li Keqiang preferred to use indicators of electricity consumption, goods shipped and bank loan disbursements.
Doubts about the reliability of China’s statistics have grown in recent years as authorities have restricted access to certain data and stopped publishing other data, such as foreign investors’ interest in Chinese stocks. The government also suspended the publication of widely-watched youth unemployment data at the end of 2023. It was later reopened to the public, but its methodology excluded university students.
Economists at Barclays in October said there was a discrepancy between a sudden improvement in China’s third-quarter headline economic activity data and weaker economic indicators in the country, including wage growth, exports and the Purchasing Managers’ Index. The company said in a letter to customers that it had noticed this. Nomura economists also pointed to discrepancies, saying data from alternative sources about the country’s real estate and financial sectors did not appear to match official data points.
Official data shows China’s economy will grow by 5.2% in 2023, and was on track to expand by about 5% last year. Growth of about 5% is critical to President Xi’s ambitious plan laid out in 2020 to expand China’s wealth and double the size of its economy by 2035. Such a goal would require the economy to grow at an average annual rate of nearly 5% over 15 years. According to estimates by officials involved in policy making,
“If my guess is correct, I think it may be more reasonable to expect the growth rate for the next few years, the next three to five years, to be 3% to 4%,” Gao said at the forum. “But,” he added. We know that the official number is always around 5%. ”
In a statement, the Peterson Institute said it values candid exchanges with Chinese experts and said, “Fact-based and analytical expert discussions about public policy foster mutual understanding and better public policy.” “We will continue to collaborate with Chinese scholars in the future,” he said. To the extent that they can engage on that basis. ”
Rebecca Feng contributed to this article.
Email us at Lingling Wei@wsj.com.
