The following is from a book by Yoichi Takahashi and Shi Ping titled "A World Going to Heaven and Hell, Is Japan Safe Thanks to Xi Jinping?
The shocking unemployment rate of 20.5% announced by the Zhongtai Securities Research Institute
Takahashi
At the end of April 2020, an economic report was released that shook the world about China's unemployment rate.
The Zhongtai Securities Research Institute released the report.
The institute is a zinc tank of the Zhongtai Securities Co., Ltd. and is headed by Li Xunlei, a well-known securities analyst.
The Zhongtai Securities Research Institute director, Mr. Li, warned that the number of unemployed people in China had already exceeded 70 million, and the actual unemployment rate was 20.5%.
Perhaps the numbers in the report were correct.
So the Chinese authorities turned on him, and he was immediately fired.
It is likely that Director Li went through the usual series of calculations and estimates and came up with 70 million unemployed people and an unemployment rate of 20.5%.
However, even though Chinese economists are aware of the reality, they lie without hesitation, saying that the unemployment rate is around 5%.
This is because they would lose their own jobs if they announced the reality.
As I mentioned earlier, China's statistics are based only on estimates for a few urban areas and are conveniently made up.
I believe that Director Li was prepared to lose his job and let the Chinese society know these real figures.
Even so, an unemployment rate of over 20% is a frightening figure.
It is a fierce level that cannot be competed with by recommendations for a street market economy.
It is probably still going on.
Unemployment is not something that can recover.
That is why we need to have proper and comprehensive unemployment statistics.
Without accurate statistical data, it is impossible to formulate policies that will not lead the country astray.
Mr. Shihira was concerned about the 6.5% decline in capital investment earlier, but in fact, unemployment is an investment in people, and investment in goods comes out in capital investment.
So investment in people and investment in goods will both come out together.
This is because it is not possible to invest only in people and not in things.
Investing only in things and not investing in people is sometimes the case when investing in robots. Still, in general, investment in things and investment in people usually go together because you need people to operate them.
Therefore, when the unemployment rate is rising like this, it is quite natural for investors to fall.
In that case, I can't help but think that the figures that Shih-Ping mentioned earlier, including the economic growth rate of 0.7% from January to September, are a bit more lenient than the reality.
If the actual unemployment rate is 20%, then it is only natural that investment should be fiercely declining and even lower.
It's no wonder we don't usually cut only people and leave only things.
It is because they will be dealt with together.
So, I think that these figures created by the government cannot hide the reality, and somewhere along the line, the tail ends up sticking out.
In China, Telling the Truth is a Death Penalty
Shi Ping
For example, if companies do not make capital investments this year, does that mean that employment will fall even more next year?
Takahashi.
Probably, both will happen together.
So, I think it will be quite difficult for the Chinese economy in the future.
By the way, I really feel sorry for Li Xunlei, the director of the Zhongtai Securities Research Institute, because he was forced to retract his report immediately and was fired.
In China, this is what happens when you insist on doing the right thing (laughs).
Shi Ping
Simultaneously, even the Chinese government's announcement about consumption is dismal, down 7.2 from January to September.
Although the Chinese government has been encouraging the expansion of consumption in various ways since the end of Corona, it has not picked up at all.
And the biggest growth in China has been in real estate investment. Can we take this at face value?
Takahashi
That's a bit unlikely. In general, real estate investment is made to expand physical assets, but I can't deny that the figures are being forcibly created in the case of China.
When it comes to real estate investment, it is difficult to tell whether it is real or fictitious unless you dig deep and investigate.
Originally, land transactions were basically not allowed in China. In terms of buying and selling ownership rights, I think there are quite a few dubious stories.
Shi Ping.
For example, even in 2019, there was an overbuilding of real estate, and the numbers were astonishing.
Officially confirmed statistical figures show that the total amount of real estate investment nationwide in 2019 was 13.2 trillion yuan.
China's GDP for 19 years was about 100 trillion yuan, which means that real estate investment accounted for more than 13% of GDP.
13.2 trillion yuan is 206 trillion yen in Japanese yen. That's about 40 percent of Japan's GDP. How is that possible? (laughs).
Takahashi
As I mentioned earlier, when discussing the Chinese economy, it is difficult to have a proper discussion because we know that the statistical figures are deceiving.
For example, China's approach to the disposal of bad debts is a complete imitation of Japan.
Normally, when the interest rate stops coming in, the loan is declared a non-performing loan. However, when they lend money to the borrowers, they receive interest, which means no bad loans.
When I talked about this at an international conference, the Chinese representative had no excuse because it was obvious that he didn't have the proper statistics.
So he ended up with this explanation. "In China, making false statistics is punishable by death (laughs). So people don't lie."
Shi Ping
That explanation itself is cruelty itself (laughs).
Isn't it the exact opposite? In China, if you tell the truth, you get the death penalty.
Takahashi
That's why there was no discussion.
It was an international conference in China sponsored by the OECD, but it wasn't easy to have a proper discussion.
That's the truth.
