China's Economic Statistics
The Wall Street Journal recently published an article on how China has stopped publishing important economic statistics. The article also implies that some economic statistics are manipulated. I'm shocked, shocked!
Getting reliable figures has always been a problem. Years ago I read a thorough analysis of Chinese figures that indicated China was overestimating its real GDP growth rate by about 2% a year. I still use that correction. In recent years, it may be even larger. If 2% is a reasonable correction, it means that China's real economic growth rates in 2024 and 2025 were around 3%, not the reported 5%.
Many estimates come from private or non-government sources, as illustrated in this article. Some numbers have been almost impossible to get. Much of China's macro economy occurs and is reported at the provincial and local level. Local officials have always fudged the figures since their careers depend on their reported figures being equal to or greater than the quotas and financial goals given to them by the national government. The situation has probably gotten worse since local and provincial revenue has depended heavily in the past on land sales and deals with housing developers.
Reported statistics on total output tend to come in close to the government's target. Maybe. But given China's economic problems and that many of the macroeconomic stats are also targets, there is room for doubt.
Government statistics on unemployment are suspect. China’s measure of urban unemployment has remained remarkably stable. The government sets a monthly target, averaging around 5.5% over the last 10 years. July’s rate was 5.2%. It was less than 6% but at least 5% for the 99th time in the past 115 months. Even during Covid, when the government enforced a massive shutdown and quarantine, the reported rate never went over 6.2%.
Leaving aside how urban unemployment is defined and measured, the figure might be somewhat accurate because of the nature of urban employment. Much of the labor force comes from rural areas and is not considered part of the permanent urban labor force. When jobs are available, rural workers come to the cities. When jobs contract, workers return to their families' homes in rural areas. Rural unemployment is not measured. Some of this is disguised unemployment. In addition, an older measure of total unemployment which the government does not target indicates a jump in unemployment in 2025.
Chinese government statistics were reporting youth unemployment at over 20% before the stat stopped being publish. A "revised" statistic reported 14%. Either way, these are high numbers. Unemployment of recent college graduates is also high, supported by anecdotal reporting of large numbers of college graduates working at part-time and "gig" jobs like food delivery.
When a government sets a target for a statistic, it ceases to be a reliable or believable statistic.
There is also disguised unemployment. There are many "zombie" companies, some state owned, that are not producing or producing far below capacity or past output. All levels of government do not want to report rising unemployment. So companies stay open and do not fire employees.
There is conflicting data on the housing situation. It seems reasonable to assume that there are about 50 million housing units either empty or for sale. Figures show a fall in housing construction but the level seems high given the amount of empty and unsold units.
Many of the empty apartment units are owned by families as an investment and are a major part of their savings. The continuing fall in the market value of housing has reduced the value of total household wealth and probably adversely affects consumer spending. The Chinese government is worried that weak demand is causing deflation. Deflation probably indicates many companies are losing money and may need more government subsidies to stay open or maintain employment. (For details, see China's Economy, Politics, and Demographics.)
It is impossible to tell what is the total yearly deficit of the entire country. Cumulatively, it is impossible to tell what the national debt/GDP ratio is. Private estimates indicate that at about 120% it is about the same ratio as the U.S. national debt/GDP ratio. But this is just a guess; much of local government borrowing has been by "off-balance sheet" borrowing in separate land development companies.
Obviously local land sales to developers and residential construction have fallen even more since the data stopped being published. On the other hand, the national government is investing huge new sums of money on industrial modernization and expansion, especially of new, critical industries. China, as usual, is building ahead of demand, hoping that economic growth and increased exports will catch up.
Some older industries such as steel and other building materials have excess capacity because demand has fallen, particularly for housing construction and probably for big public infrastructure projects. This is one reason for rise in exports and Chinese building of overseas infrastructure projects, especially in Asia and Africa. But China has cut back on overseas infrastructure projects.
There is massive overcapacity in the electric vehicles (EVs) industry. Even as a few, small companies have gone bankrupt, new producers are entering the industry. Some have ties to big e-commerce, social media and telecomm companies; their technology is apparently transferable to the electronics and "infotainment" components of EVs. EV sales are replacing gas-powered car sales, leaving a shrinking, unprofitable industry sector with very low capacity utilization, with unit sales more than 50% below the industry high achieved in 2017. Almost all the companies are probably losing money but are staying open, and keeping employment levels up.
Total domestic auto sales will probably be lower in 2026. Somewhat perversely, the Chinese government has "suggested" that car companies stop lowering prices since only a few large companies are covering their costs. Companies, in vicious competition to gain market share and utilize highly-automated plants, have adopted a number of short-term strategies to stay in business. One of them is to sell "zero-mileage" used cars.
Production may be about the same because of rapidly-increasing exports of both EVs and gas-powered cars. This will not continue (unless the U.S. opens up to Chinese EVs). The big Chinese EV producers like BYD and Geely are setting up foreign production plants in Latin America and Europe. Other Chinese EV companies are negotiating joint production programs with local companies.
China produces half of the world's coal. Coal mining is an important source of employment in some local economies. Local authorities have been reluctant to close down small coal mines. But at some point China's massive investment in renewable energy will lead to a large shrinkage of China's coal industry.
While China is the world's largest producer and installer of solar panels, China is still expanding coal production with new coal-fired plants to generate more electricity. The government promises that coal production will begin to decrease after 2030 and total carbon emissions will start to fall in a few years.
In the meantime, China has invested in a massive increase in energy generated by solar. Total energy capacity, probably combined with low growth rates in demand due to low growth rates of output, has led to a large wastage of energy produced by solar. Again, private estimates are far higher than official government figures.
Related, Chinese cities have some of the worst air pollution in the world.
China is trying to stimulate domestic consumption but with the fall in the value family wealth, high unemployment among young consumers, and very low family-formation and birth rates, it is hard to see how this will happen, at least in the near term. Domestic sales of autos, including EVs, are down in 2026. Production levels are being maintained because of a large increase in exports.
Like in the United States, economic growth in China will mostly be a function of developing new technologies and selling into the global economy.
For a detailed look at the Chinese economy, see my
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For a summary of the essays on China, see
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