The economic bounce back due to China's early suppression of the coronavirus has produced a record growth rate. China's GDP rose 18.3% in the first quarter compared with the same lockdown-induced figure last year, numbers released Friday show. Just as China's economy shrank for the first time on record in Q1 last year, with a 6.8% move backwards, now we have an unprecedented rebound in response.
But is China healthy? Is it happy? Is it well-run?
None of these questions are answered in the figures released by the National Bureau of Statistics today. China's carefully massaged GDP figures paint, in normal times, a picture of an increasingly confident economy steadily managed by a dutiful party. After an aberration, a scribble, we are back inside the lines.
The 18.3% growth comes, the statistics bureau tells us, even before it gives us the GDP figure, "under the strong leadership of the Communist Party of China (CPC) Central Committee with Comrade Xi Jinping at its core." In journalism, we call that burying the lede.
Then there's more propaganda blather up front. This growth miracle came because "all regions and departments conscientiously carried out the decisions and arrangements made by the CPC Central Committee and the State Council," and it all happened because party masterminds "consolidated and expanded the achievements of COVID-19 prevention and control as well as economic and social development, and implemented macroeconomic policies in a scientific and targeted way."
THEN the stats bureau gets around to the numbers. Before the nitty gritty, it's necessary to assert the Communist Party line that COVID-19 is all under control, the government response has been brilliant, concluding that the "external environment" is still uncertain. Other countries, get your act together!
The 18.3% year-on-year growth in Q1 came from C¥24.9 trillion (US$3.8 trillion) in goods and services, and was more or less in line with the 18.5% rise forecast by economists. The Q1 tally is a narrow 0.6% advance on the figure for Q4 2020. It is 10.3% higher than the Q1 figure in 2019, a time that wasn't influenced by the pandemic, so the new figures show solid double-digit growth over the course of two years. Full-year pre-pandemic GDP growth in 2019 was 6.0%. Over two years, the Q1 average annual growth was 5.0%.
China did so poorly in Q1 2020 because it was the epicenter, at the end of 2019 and leading into last year, of the coronavirus. It has done its level best to obstruct any independent investigation of its origins. But we know for sure that the central city of Wuhan was the first place that substantial numbers of people got sick. To see China post these numbers now was unimaginable at the time.
China did so well at combating the virus because it is willing to put "state security" above all else. No measure was too draconian in an effort to stamp out, largely successfully it has to be said, a disease that the party structure initially tried to deny existed, or spread between people. Early warning may have prevented such widespread infection, and the pandemic's global span. But once the disease became a nationwide problem, the Communist Party's machine cranked to powerful effect to bring it under control. Highways were blocked, millions of people were prevented from leaving Wuhan and other cities, zealous local officials even barricaded curfew violators inside their homes, metal bars preventing the front door from opening. Pets died because owners couldn't return to feed them.
It worked, at a human cost that's very hard to tally. It does not show up here. The Communist Party also essentially ordered factories back into operation, whether owners thought that was for the good of workers or not. This recovery has been first and foremost driven by production, with consumer spending lagging. Life is back to normal in many ways inside China, but spending patterns are taking time to recover. People are not yet confident their household finances can return to normal.
I'm not alone in thinking that GDP is an entirely unsatisfactory way to assess the health of an economy, certainly of a nation. If you concrete over every span of wilderness, build highways across every blade of grass, and if you force factories and workers to work all day, your country will appear to be in robust economic health. On paper, it may look very good. In reality, life may be miserable, the staff worked into poor health. "Happiness" may be something that's printed on company banners in the breakroom and written into corporate-culture boilerplate but in short supply in people's hearts.
Because China locked down extremely aggressively, it locked down short and sharp. But another reason the Q1 2021 figures look good is that many workers were prevented from returning to their home or ancestral towns for the Spring Festival -- equivalent to Thanksgiving and Christmas wrapped up in one bundle -- which is for many poor migrant workers the only chance they get to go back home, to see children, to see spouses, to take time off. Urban Chinese professionals were also encouraged to stick around, and although they're able to afford the trip at other times of the year, the sense of festival and togetherness was absent. Some of those who remained in the cities complained of boredom, and said at least they could work.
Not being able to see your kids for more than a year is not reflected in the GDP numbers. It will definitely be reflected in people's memories, and their souls. I wouldn't be surprised if social scientists attribute the strange year as a cause of the splintering of a larger number of households. Well beyond China, too, but this lockdown has left thick scars here.
Today's figures indicate an old-fashioned socialist economy in mindset. First up, we hear that the climate conditions for farming have been good, "spring ploughing and sowing went smoothly, and the winter wheat grew slightly better than average years." Pork output was booming, the pig business up 31.9%, with 415.95 million pigs, up by 29.5% as China recovers from a previous porcine pandemic: African swine fever. So 2018. In fact, the rebound in pig numbers matches the almost 30% drop in pork stock as millions of hogs had to be slaughtered due to "ASF."
The National Bureau of Statistics rattles on through stats about industrial production, then services, retail sales, fixed-asset investment, imports and exports. Down near the end of priorities we hear about real people, the jobless rate down slightly to 5.3% in Chinese cities.
Per-capita disposable income stands at C¥9,730 (US$1,492) for Q1, rising 7.0% per year when you back out the pandemic effect. That's about US$6,000 per year. For urban households, it's US$8,000 per person, but US$3,300 in the countryside. The Communist Party has pledged to bring average income (not directly comparable to the disposable figure) above US$10,000 in a bid to become an emerged economy.
Where does China go from here? Officially, "we must follow the guidance of Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, and continue to consolidate the foundation of economic stability, to gather strength for development and to guarantee basic requirements for security."
Security, stability, an overarching Communist masterscheme, surely fitting within the next Five-Year Plan. Life on the street, however, is not being lived with full confidence, freedom of spirit or will. Periodic breakouts of COVID produce further harsh lockdowns. Vaccine acceptance has been low, which may hamper China's full recovery.
Friday's figures look good on paper. What we can say for sure is that the old Socialist production-driven model driving this US$15 trillion economy is back.