China unexpectedly released delayed economic data Monday, a day after the conclusion of a key Communist Party congress, showing weak growth and prompting markets to plunge.
The release of this key economic data just after the congress adds to concerns that, under Xi’s lead, politics will increasingly trump economic priorities.
On Monday, the bureau reported that gross domestic product grew 3.9 percent between July and September of this year, slightly higher than analyst expectations but still below the government’s target annual goal of “around 5.5 percent.”
“China’s official economic data are political first, economic second. Last week’s delay in the release of these numbers and then the curiously upbeat GDP figures at the close of the Party Congress underscored this point yet again,” said Shehzad Qazi, managing director at China Beige Book, which collects and analyzes data on China’s economy.
After the release of the data, Hong Kong’s Hang Seng Index plunged 6 percent to levels not seen since the 2008 financial crisis, while the Shanghai Composite and the Shenzhen Composite indexes both fell by about 2 percent.
China’s economy has been battered by a slump in property values, rising unemployment, slower consumption and continued coronavirus controls enforced through lockdowns and onerous testing requirements for residents. Official data Monday showed unemployment rose to 5.5 percent in September, up from 5.3 percent in August.
Under Xi, high economic growth, once a top priority for the leadership, has taken a back seat to political objectives. The government has increased controls over the private sector while expanding the role of state-backed companies and focusing on reducing inequality.
On Sunday, party personnel changes were announced that included the retiring of officials seen as more committed to market reforms.
During his report to the congress delivered last week, Xi said his party would ensure that wealth and income were “well regulated,” prompting speculation that China may introduce new taxes on the wealthy in the name of “common prosperity,” one of his landmark campaigns.
Xi said that the global economy “needs China,” and that the world’s second-largest economy has “great resilience, potential and latitude.”
Hopes that China might loosen its zero covid policy after the congress were dashed after Xi defended the policy and officials went into overdrive adhering to it before the meeting. At least 30 cities were implementing some form of lockdown as of Oct. 17, according to state media reports.
“The yardstick by which Xi measures success is more likely to continue to be health, as in the containment of the virus, and not GDP,” Qazi said.