China's GDP is Estimated to Be Overvalued by One-third, Roughly Half That of the United States

In some areas of Guangzhou, housing prices have plummeted by as much as 70%. (Video screenshot)

[People News] An article published by Sina.com on January 16 claims that in 2025, China's GDP growth will be 5.4% in the first quarter, 5.2% in the second quarter, 4.8% in the third quarter, and around 4.5% in the fourth quarter, with an overall economic target of approximately 5% GDP growth for 2025 already achieved.

To lend credibility to these figures, the Communist Party of China deliberately sought out a so-called expert to announce these numbers under the guise of this expert's authority.

However, there are indeed some experts in China who are willing to speak the truth, such as Fu Peng, chief economist at Northeast Securities, and Gao Shanwen, chief economist at China Investment Securities. They have expressed pessimism about the Chinese economy, which sharply contrasts with the Communist Party's insistence on promoting a 'positive narrative about the economy.' Unfortunately, they have now been silenced by the Communist Party.

Nonetheless, the Communist Party's influence does not extend to foreign experts.

On January 13, The Wall Street Journal published an article highlighting that in the book "Command of Commerce: America’s Enduring Economic Advantage over China," released by Oxford University Press, authors Stephen Brooks and Ben Vagle raise doubts about the scale of the Chinese economy. They assert that the GDP figures released by the Chinese Communist Party (CCP) are overestimated by approximately one-third.

Stephen Brooks is a professor of government at Dartmouth College, while Ben Vagle is a PhD student in political science at Stanford University.

The authors identify two primary reasons for the CCP's inflated economic figures: political motivations and excessive investment. Provincial leaders within the CCP often manipulate data to secure promotions, and the central government has engaged in large-scale, unnecessary investments over the decades. While these investments have artificially inflated growth figures, they have not produced significant returns.

The two authors utilise satellite imagery to assess the concentration of nighttime lights, arriving at a conclusion that diverges from official statistical data. Wager remarked, 'No one would manipulate nighttime lights to alter economic data, which makes them an objective source for observing the real situation on the ground.'

From this analysis, they concluded that China's GDP may be approximately half that of the United States, rather than the two-thirds suggested by the official statistics from the Chinese Communist Party.

The authors noted that when evaluating economic strength through corporate profits, American companies account for 55% of global high-tech profits, while Chinese companies contribute only 6%. For instance, the iPhone is assembled and packaged in China, but it is fundamentally an American product, designed in Cupertino, California, and generates significant profits for American firms.

Brooks stated, 'Profits are the best measure of economic influence because they reflect how difficult it is to replace a product or technology.' He further explained, 'If a technology or product is hard to replicate, profits will remain high for many years, indicating that competitors find it challenging to enter this market.' Profits signify that a company possesses something difficult to replicate, making it hard for others to displace it in the market.

Brooks and Wager pointed out that while China imports a large number of intermediate products, processes them, and then exports them, there are very few products that China can manufacture efficiently and competitively without Western technology. China is skilled in assembly and less complex production, but it still struggles to master the 'indispensable' technologies that can genuinely create wealth. △