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Chinese markets tumble after delayed economic growth data release

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China unexpectedly released delayed economic data on Monday, a day after the conclusion of a key Communist Party congress, showing weak growth and sending markets tumbling.

Last week, China’s National Bureau of Statistics postponed the release of GDP and other economic indicators without explanation the day before their scheduled October 18 report. The release reportedly coincided with the week-long congress in Beijing where Chinese leader Xi Jinping secured a third term and filled senior leadership positions exclusively with his allies.

The publication of these key economic data immediately after the congress adds to concerns that under Xi’s leadership, politics will increasingly trump economic priorities.

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On Monday, the office said gross domestic product rose 3.9% between July and September this year, slightly above analysts’ expectations but still below the government’s target annual target of “about 5, 5%”.

“China’s official economic data is political first, then economic. Last week’s delay in releasing these figures and then the oddly upbeat GDP figures at the close of the Party Congress again underscored this point,” said Shehzad Qazi, managing director of China Beige Book, which collects and analysis of data on the Chinese economy.

After the data was released, Hong Kong’s Hang Seng Index plunged 6% to levels not seen since the 2008 financial crisis, while the Shanghai Composite and Shenzhen Composite indices both fell around 2%.

China’s economy has been hit by plummeting property values, rising unemployment, slowing consumption and continued coronavirus controls imposed by lockdowns and onerous testing requirements for residents. Official data on Monday showed unemployment rose to 5.5% in September from 5.3% in August.

Under Xi, strong economic growth, once a top priority for leaders, has taken a back seat to political goals. The government has tightened controls on the private sector while expanding the role of state-backed companies and focusing on reducing inequality.

On Sunday, party personnel changes were announced, including the retirement of officials seen as more committed to market reforms.

In his report to congress delivered last week, Xi said his party would ensure wealth and income were ‘well regulated’, sparking speculation that China could introduce new taxes on the wealthy. in the name of “common prosperity”, one of its landmarks. campaigns.

Xi said the global economy “needs China” and the world’s second-largest economy has “great resilience, great potential and great latitude.”

Hopes that China might relax its zero covid policy after the congress were dashed after Xi defended the policy and officials went out of their way to adhere to it ahead of the meeting. At least 30 cities were implementing some form of lockdown as of Oct. 17, according to state media.

“The yardstick by which Xi measures success is more likely to continue to be health, as in virus containment, not GDP,” Qazi said.

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