Misinformation has become the new watchword of modern politics and typically consists of cherry-picked facts that lack context and suggest a conclusion that would otherwise be irrational or incomplete. For example, claims by the Biden administration that the president’s policies produced one of the fastest economic recoveries on record leave out the reality that much of the growth came not from a well-crafted policy agenda but rather from state governments reopening their economies after a year of lockdowns.
President Joe Biden’s recent tweet comparing U.S. and Chinese economic growth is one example of this false claim. He tweeted, “Independent experts have even projected that the U.S. economy could grow faster than China’s economy this year. That hasn’t happened since 1976.”
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Without context, the tweet suggests that under his administration’s watch, U.S. economic growth will surpass its greatest rival, a country known for posting astounding GDP numbers. Yet what Biden’s claim fails to acknowledge is that China’s economy has been stunted by authoritarian policy blunders such as “zero-COVID.” Therefore, America’s superior growth prospects are due not to a significant improvement in the U.S. economy but to an underperforming Chinese market.
In reality, China’s economy is beholden to the political will of the Chinese Communist Party and is currently dealing with the consequences of Chinese President Xi Jinping’s “zero-COVID” approach. Cities such as Shangai, a commercial hub home to tens of millions, have been choked by strict limits on everyday life and commercial activity. The city is a shadow of its former self as barricades block sidewalks, quarantine workers patrol the streets, and drones circle the air telling residents to “control their soul’s desire for freedom.”
It is no surprise that these intense lockdowns severely undermined economic growth. Chinese retail sales and exports fell dramatically following the introduction of Beijing’s lockdown policy, and from April to June 2022, China posted the lowest growth numbers since the virus outbreak.
The reality of this economic slowing was first hinted at when the CCP withheld the release of its GDP data indefinitely right before the 20th Party Congress, a leadership change that occurs every five years. For a country that routinely touts its staggering annual growth rates, the motivation to hide the data is clear: Beijing failed to deliver what it promised, which is regular and substantial increases in economic well-being.
This is not the first time disappointing economic news has been withheld. Beijing has been slowly withholding more and more of its economic data over the past several years.
It is noteworthy that the Biden administration pointed specifically to the year 1976 in its claim about the U.S. economy’s growth. In 1976, Mao Zedong, China’s most brutal dictator, died, and the country began experimenting with market reforms. By 1978, the CCP announced a campaign to liberalize the country, opening up to the world and allowing Chinese citizens to engage in increasingly market-driven activities. Beijing posted extraordinary GDP increases, particularly because catch-up growth is much easier than growth at the cutting edge. But as China approached middle-income status, the CCP observed slower economic growth because progress became increasingly dependent on developing high-skill services and technological innovation.
These economic realities, however, are not solely to blame for China’s slowing economy. The CCP, under the leadership of Xi, frequently allows politics to disrupt economic activities. China’s authoritarian system has pushed aggressive wealth redistribution schemes such as Xi’s Common Prosperity agenda and central planning policies such as Dual Circulation, which disrupt the economy. As a result, an increasing number of companies view China with skepticism as political risk becomes a growing threat to profits. This shift in business attitudes, combined with supply chain disruptions and increasing labor costs, explains much of the economic slowing.
On its face, the fact that U.S. economic growth will overtake an important geopolitical competitor is welcome news. However, Biden’s tweet about China, like most statements from political actors, requires context. The fact that Washington’s growth statistics look better than Beijing’s speaks volumes about the CCP’s policy blunders while saying little about the current administration’s economic success. Americans would be wise not to base their expectations on a struggling, authoritarian country, but rather on the economic realities they see at home.
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Dr. Ryan Yonk is senior research faculty and Ethan Yang is an adjunct research fellow at the American Institute for Economic Research (www.AIER.org).
