China GDP and other key economic data delayed amid 2022 Communist Party Congress

Hong Kong
CNN Business
 — 

China has abruptly delayed the publication of key economic data, one day before its scheduled release, as the ruling Communist Party gathers at a major political meeting against the backdrop of a faltering economy.

The country’s National Bureau of Statistics updated its schedule on Monday, with the dates for a series of economic indicators – including the closely-watched GDP growth – marked as “delayed.” The indicators, which had been scheduled for release on Tuesday, also include quarterly retail sales, industrial production and monthly unemployment rates.

The bureau did not give a reason for the delay or set a new publication date.

Separately, the country’s customs authority also postponed the release of monthly trade data, which were initially scheduled to come out on Friday.

The delay of the highly anticipated data coincides with the week-long 20th Communist Party National Congress in Beijing, where Chinese leader Xi Jinping is expected to secure a norm-breaking third term in power. Priorities presented at the gathering will also set China’s trajectory for at least the next five years.

“The delay suggests that the government believes that the 20th Party Congress is the most important thing happening in China right now and would like to avoid other information flows that could create mixed messages,” said Iris Pang, chief economist for Greater China at ING Group, in a research note on Tuesday.

Other analysts believe it could be because the data sets are not pretty.

“My forecast is for a further decline of 1.2% [on a quarterly basis for China’s GDP]. This would mean China had joined the US in a technical recession,” said Clifford Bennett, Chief Economist at ACY Securities.

The delay would make sense “from an image management perspective,” he said. Some economists call two consecutive quarters of contraction a technical recession.

China’s GDP declined 2.6% in the second quarter from the previous one, reversing a 1.4% growth in the January-to-March period. On a year-on-year basis, the economy expanded 0.4% in the second quarter.

Analysts have widely expected third-quarter growth to remain weak, as strict Covid curbs, an intensifying crisis in real estate, and slowing global demand continue to pressure the economy.

Economists polled by Reuters have expected China’s GDP to expand by 3.4% in the third quarter from a year earlier. That would fall far short of the government’s full-year growth target of around 5.5%.

Many international organizations, including the IMF and World Bank, have recently downgraded China’s GDP growth forecasts for this year.

Bennett expected the third-quarter GDP data to be released after the Party Congress.

“Whenever the release occurs, we should all be prepared for some global financial market reaction if the world’s two largest economies are both in recession this year, ” he said.

China’s economy is facing mounting challenges. Growth has stalled, youth unemployment is at a record high, and the housing market is in shambles. Constant Covid lockdowns have not only wreaked havoc on the economy, but also sparked rising social discontent.

In the 20th Party Congress report released on Sunday, Xi renewed his pledge to grow China into a “medium developed country” by 2035.

That would mean China needs to grow at an average growth rate of around 4.7% a year from 2021 to 2035, according to Larry Hu, chief China economist for Macquarie Group.

Hu added that the target might be hard to meet, as the economy faces several structural headwinds, such as the property downturn, an aging population, and rising US-China tensions.