By Bai Ding
In the past 10 years, China’s international image, especially that of the Chinese government’s ability to manage its economy, has experienced a stomach-churning, roller coaster-like change.
Xi Jinping’s first decade was a decade in which “China’s economic miracle” was written about in great detail, both inside and outside China.
The self-praise from China’s official quarters and from general private Chinese opinion was high-profile and continuous, and every headline excited readers. It seemed that China’s economic express train was equipped with a magical perpetual-motion machine, and could not slow down even if it wanted to. (For example: “China’s Economic Miracle Enters the “Second Quarter” of Improving Quality and Efficiency” (Xinhuanet 2013-09-16); “The Miracle of China’s Economic Development” (“China Today” 2021-07-23), etc.)
Driven by China’s high-profile self-promotion, international media were not to be left behind, and followed up to report on China’s economic miracle from various novel angles. (For example: “Which Chinese entrepreneurs can best represent China’s economic miracle?” ” (BBC Chinese website, January 23, 2014); “A Culture of Diligence: The Key to China’s Economic Miracle” (Hong Kong Economic Journal Financial Monthly, September 2014); “China can still create an economic miracle during the global recession” What’s the secret? ” (Al Jazeera, January 30, 2021), etc.)
However, the “Chinese Economic Miracle” that Xi Jinping worked hard to create was ultimately ruined by Xi himself. His second decade began with the phrase “the end of China’s economic miracle.” This time, it was the international media that took the lead in sounding the alarm on China’s economy. (For example: “The Chinese Dream is becoming China’s nightmare” (U.S. “National Interest” magazine, April 3, 2023); “China’s growth and middle-class dream have disappeared together” (Britain”s “Guardian” July 23, 2023) ), etc.)
Faced with internal economic stagnation and the complete defection of the outside world’s media, China’s previously enthusiastic private media have become completely silent. It is a pity that China’s top official media, which are actually comparatively few, have to energetically roll out articles about what the foreign media are supposedly saying to regain momentum: “US Media: China has been and will become the world’s biggest economic miracle again” (“Global Times” August 2, 2023); “Why is it said that the next China’ miracle is still in China” (“Xinhua Daily Telegraph”, September 20, 2023), etc.
This bluffing from China’s top official institutions, in the face of the reality of China’s economic weakness, has been nothing more than the sound of one hand clapping, ineffective in reviving the previous wave of praise. Not only has the international media’s judgment of China’s economy not improved in the least, but their pronouncements have actually gone from disappointment a few months ago to a death sentence now: “The End of China’s Economic Miracle” (Foreign Affairs, August 2, 2023); Weak growth, high debt: China’s economy is in deep crisis” (RFI, September 29, 2023), and more.
Why has the assessment of China’s economic situation turned on a dime these past few years? Is it because the world suddenly changed its definition of the term “economic miracle”? Or is it that the “Chinese Economic Miracle,” which was a hosanna first sung by Chinese officials and exported to the world, was actually from the beginning a boast that looked glamorous but could not withstand careful scrutiny?
To assess the authenticity of the “China Economic Miracle,” there are many measurement criteria that can be used, for example quantitative research based on one of the most basic academic concepts in economics, the ratio of output to inputs. But this article only analyzes the “China Economic Miracle” idea from the angle of the three official narratives that are most familiar to the Chinese public.
The first measure of the “economic miracle” that populates China’s official high-profile boasts is China’s annual economic growth rate over the past 40 years of reform and opening up. Compared with the 3-5% annual economic growth rate of developed countries in Europe and the United States, China’s average annual growth rate of 10% over the past 40 years of reform and opening up is indeed dazzling. But once you delve deeper, you will find that China’s high growth rate is not a unique economic growth miracle worldwide.
From the high-growth achievements already achieved by fellow Asian countries and China’s own history of “high-growth collapse,” it can be seen that China’s high economic growth rate over the past 40 years of reform and opening up is not an unprecedented and unique “economic achievement.” Therefore, It should not be regarded as a “Chinese economic miracle.”
The second measure of the “economic miracle” that China’s officials make high-profile boasts about is that after 40 years of rapid development, China’s total GDP now ranks second in the world. China’s national economy has grown from the brink of collapse after the Cultural Revolution to the world’s second largest economy. Although gratifying on the surface, for a superpower with the largest population in the world, ranking at the top in terms of economic aggregate is a matter of course, not an achievement to be proud of. In modern history, the last time China’s GDP ranked first in the world was in the 1820s, but that was also the beginning of Manchu China’s transition from corruption to decline and collapse. Therefore, as far as China is concerned, whether it ranks first in total GDP is not an effective indicator of economic and political health. The reason is that behind the aura of China’s current huge GDP is the reality that China’s per capita GDP is still lower than the world average. (China’s per capita GDP ranked 86th in the world in 2019.)
The third aspect of an “economic miracle” that China makes high-profile boasts about is that China’s rapid development has reduced China’s poor population by approximately 800 million, accounting for 75% of the global poverty reduction population during the same period. But the fact is that China still has a huge number of of poor people. They are still poor even after being lifted out of poverty by the government. Compared with their lives before they were lifted out of poverty, the only difference is that the government no longer even publishes poverty figures. And taking a step back, even if the Chinese government’s achievements in poverty alleviation are genuine, 40 years of economic development at the right time and place have only lifted these people out of extreme poverty, which in itself is not an economic achievement worth boasting about.
In the past 10 years, the Chinese Communist Party and government have exaggerated and boasted about their economic achievements since the 1980s through various internal and external channels, creating this myth of “China’s economic miracle.” Its purpose is not only to instill and strengthen the legitimacy of its governance to the Chinese people, but also to use it as bait to attract and retain investment from all over the world. With continuous foreign investment, China’s investment-export-dependent economy will have a driving force, and China’s “economic miracle” can continue.
If the Chinese government had not placed itself in opposition to the world’s major free economies, or at least had it been able to live within its means, the achievement bubble of the “Chinese Economic Miracle” would not have burst so quickly.
But what is extremely ironic is that the Chinese Communist Party and the Chinese government actually regard the boasted rich economy as China’s economic reality, and squander existing and future wealth lavishly. Before the “One Belt, One Road” plan was launched in October 2013, the value created by China’s economy was mainly used to support China’s powerful elite and the its maximal civil-service team. Confidence in the “China Economic Miracle” has led the Chinese government to add huge sums of money to the “Belt and Road” to its already uncontrolled waste.
How much money has China invested on the Belt and Road Initiative so far? Like all other Chinese data, the amount of money China has invested in Belt and Road has been a mystery. According to reports from Chinese state media, some said the cumulative investment is US$100 billion, some said it is US$4 trillion, and some said it is US$10 trillion. Although these reports all quote official figures, the difference between the figures can be as high as 100 times depending on political needs at the time of publication.
No matter what the real number may be, one thing is certain: this investment has reached the end of its tether and the amount of it is shrinking sharply. In the first few years of the implementation of Belt and Road, recipient countries were full of praise for China. However, in recent years, discordant voices and even voices opposing participation have begun to appear in these countries. The most outspoken reason for opposition is that the funds promised by China have not yet arrived.
The wealth that China uses to support its bureaucrats and powerful elites, and the capital it injects into Belt and Road are all derived from a Chinese economy that relies heavily on international capital and markets and is not even a miracle to begin with. Using limited resources to support two unfilled holes will inevitably lead to shortages elsewhere. The loss of continuous injection of external capital into the Chinese economy has contributed to the early revelation of the true nature of the “Chinese economic miracle”.
This is the real reason for and process through which the “Chinese Economic Miracle” turned into the current Chinese economic crisis overnight.
Source: Eurasia Review
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The views of the author do not necessarily represent those of this journal.