Foreign investment into China may further take a beating – not just because its economic indicators remain grim but due to the reluctance of authorities in releasing data. Last month, China announced that it will stop publishing youth unemployment data. But besides the unemployment data, several other pieces of statistics have quietly gone missing or buried from the public eye.
Amid a tumbling property market, data showing how much land the developers are buying have gone missing from the public domain. Similarly, the debt level of the country’s local governments has always been an area of concern. But again, there is no clear data on the same. The list is longer.
Business Insider in a report noted that transparency in China’s economic data has always moved the same cycles as its politics. And now with Chinese President Xi Jinping and the Chinese Communist Party openly embracing some of the hardline practices of the past, “data is disappearing in kind.”
“Such decisions negatively impact the sentiments of investors that naturally seek more transparency and disclosure,” an educator, who is based in China told India Narrative.
“As the economic situation worsens, the authorities will get more proactive in window-dressing efforts to suggest that the going is normal,” he said. The trade war with the US has also dented data sharing process of the Chinese.
Data authenticity has always been a thorny issue but the global community and investors have shown little regard for hard data when the going was good in China but now with things going southward, Beijing’s knee jerk reactions are coming to haunt them.
The Business Insider report added that data from exports to cement production — which are arguably more crucial for understanding the country’s structural malaise than youth unemployment — have vanished or become corrupted to the point that they’re no longer useful.
“The economy has been showing signs of a structural slowdown for a long time, but the strain on the system has become so great that the market can no longer ignore it,” it said.
Foreign direct investment (FDI) into China has been slowing down since the Covid 19 pandemic. April-June quarter, reaching the lowest level on record.
In 2022, China attracted FDI of $180.17 billion– a 47.64 per cent decline compared to 2021. This year, the downward trend has continued.
The Japan External Trade Organisation (JETRO) in an internal survey released last December revealed that more than 72 per cent of the Japanese companies were keen to expand their operations in India. But for China, the number was small at only 33.4 per cent.
Asia Nikkei said that doubts about China’s openness to the outside world have also dragged down investment. When AmCham China (American Chamber of Commerce in China) asked members if they had confidence that the country would continue to open up over the next three years, only 34 per cent said yes, down from 61 per cent two years ago, it added.