How dodgy data sent China's economy off course

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She was warm, funny, every student's favourite teacher.

No one ever suspects a woman could do such a thing, especially one with kids.

The parents trusted her, too.

I felt that the school was a safe place.

If anything was to happen, there would be somebody there.

But it was all a smokescreen.

She was brainwashing us from the start.

The favourite: a five-part five-part investigation from background briefing.

Search background briefing on the ABC Listen app or wherever you get your podcasts.

This episode of If You Listening first aired in August 2023.

This podcast was produced on the lands of the Awabkal, Darug and Iora people.

At 3.25 p.m.

on August 27th, 2021, thousands of people in the Chinese city of Kunming were standing on their balconies or in streets and parks holding their cameras.

Everyone was extremely excited.

As 3:30 got closer, the tension built.

How loud would it be?

Would they all fall?

Am I far enough away?

They were all looking at a neighborhood of 15 high-rise buildings 30 stories high.

15 towers, unfinished for seven years.

The developer bankrupt.

On radios across the area, a countdown started.

4.8 tons of explosives detonated.

After the bang, a rumbling sound spread across the city.

Like candlesticks that had just had a tablecloth pulled out from underneath them, they toppled over sideways into, onto, and around each other.

It's not something you see every day.

And yet...

It's not an isolated case.

Across China, the building boom that powered the economic miracle is running out of steam.

Across China, more than 20% of apartments are vacant.

The apartments are either unwanted or have been bought by middle-class Chinese investors as a safe place to put their money.

But their money is not safe.

Property prices are going down.

Property developers are going down, driven bankrupt by the massive debt they accrued to build these apartments.

The population is going down, the birth rate's going down, meaning there's no one to live in these apartments, which is why.

If you want to see the extraordinary video of these buildings collapsing and lots of other visual things in this story, check us out on YouTube or iView.

You can watch all of our old episodes there.

Now, China's situation isn't unique.

Similar things have happened in their neighboring countries due to lots of different factors.

But in China, it's happening really fast.

The question is: what makes China different?

Well, in a way, it's for the same reason most Chinese people my age have no brothers or sisters.

China's one-child policy is over, and now it's starting to cost China a lot.

I'm Matt Bevan,

and this is if you're listening.

In October 1979 an unusual group of people was sitting around a table in Beijing.

A Zimbabwean activist, two famous novelists, the deputy director of the British Museum, the paramount leader of China, Deng Xiaoping, and David Attenborough.

A giant prehistoric looking bird.

As in that David Attenborough.

A shoebill.

The nature documentary guy.

That same year, Attenborough had launched his landmark show Life on Earth, basically the kind of docco he's now known for making.

It took three years to make and sent him all over the world.

But one country he struggled to visit was China.

Not many foreigners were allowed in at the time.

They show no interest in receiving tourists.

One of the only ways to go there was to join a delegation.

So as a distinguished British person, he did.

He and the others got to tour Beijing and sit down with the guy running the entire country in a televised chat.

David Attenborough, ever the environmentalist, had a burning question for Deng, one he had never been asked by Western media before.

He asked what China was planning to do about population growth.

Deng said, At present, we are encouraging married couples to have only one child, and material awards are given to those couples who only have one child.

Just as an aside, I found this out by digging through an old transcript.

I don't think anyone realizes that it was David Attenborough who scored one of the journalistic coups of the decade, confirmation that China had introduced the one child policy.

So what is the one child policy?

Why was it put in place?

Well, in 1970, the average Chinese woman gave birth six times in her life.

Child mortality was 10%, which is of course tragic.

But it meant that most Chinese families had five or six kids.

Chinese authorities saw this as a big, big problem.

So they asked one of their most brilliant citizens to look at it, Song Jian.

Song Jian had a reputation as a genius whose mind could be directed at any problem and solve it quickly.

But he wasn't a demographer.

He was a rocket scientist.

The government asked him to look at the population problem.

Working on it in his spare time, he predicted that the country's population would hit 4 billion in a century.

Now, Song Jian might have been great at predicting the trajectory of missiles, but this trajectory was

way off.

He ignored the fact that throughout the 1970s, Chinese fertility plunged from six kids per woman to two and a half kids per woman thanks to access to family planning and better education.

That's what happens literally everywhere in the world.

If you send girls to school and give them access to contraception and abortions, they will have fewer kids.

But Chinese authorities saw Songjan's scary charts and implemented the one-child policy.

But the greatest single threat to Chinese progress and development is people.

There are millions too many, hundreds of millions too many.

The one-child policy was about increasing productivity.

I have four kids and it affects my productivity a bit.

The Chinese Communist Party wanted to see what would happen if everyone only had one kid.

We have to strongly advocate one child one couple.

They didn't mess about.

They wrote it into the country's constitution.

They only allowed couples to marry after they turned 26.

In a nation of a thousand million, the state decides when people can be married.

This couple have promised the state they'll have only one child.

That will be their contribution to population control.

And it being the Chinese Communist Party, they monitored people to make sure that they didn't break the rules.

The penalties for having too many children, especially in the towns, can be severe.

Work permits are withheld and housing space becomes more difficult.

In each city neighbourhood, they set up a family planning clinic.

The state keeps records of the breeding potential and performance of all residents.

Who's been sterilized?

Who's taking the pill?

Who's signed the promise to have no more children?

A government official proudly boasted that the party had prevented the birth of 400 million people.

In rural areas, people were sterilized against their will.

In 1983 alone, authorities performed more than 20 million sterilizations and 15 million abortions.

Children born in the 1980s and 1990s in China became the first generation of only, only children.

The Chinese call them Xiao Wundi.

That means little emperors.

A pejorative label for only children.

The population began to skew wildly male as people avoided their only child being a girl with abortion, abandonment, or straight-up murder.

These only children grow up without the tempering influence of brothers and sisters.

There are now millions of Chinese bachelors going to great lengths to make themselves more appealing to women.

This phenomenon has actually driven up property prices as owning an apartment is seen as a prerequisite for marriage.

The one-child policy may have worked but it was wildly unpopular.

And by 2010 the Chinese Communist Party realized that it had worked a little bit too well.

Their family planning policies had started a timer.

They had a generation of workers unencumbered by lots of kids.

But soon enough, their parents were going to retire and they'd be back to square one.

The working population would have too many old people to look after and not enough young people to work.

Australian economist Ross Garneau put it like this.

A big question that worries a lot of people in China is:

will China get

old before it gets rich?

You can't control how many old people you have.

Well,

I don't know about can't, but you definitely shouldn't.

But the Chinese Communist Party began to ask, when should we let people start having more than one kid again?

To answer that question, they would need really, really good data on how big the population was getting.

No problem.

That's what censuses are for, right?

The census will tell the Chinese government just how many people they have to look after, what social and political programs to develop, where to spend money and where not to spend money.

But for a million different reasons, the authoritarian Chinese government incentivises lying.

Are you an official who wants more government funding sent to your area or a higher salary?

Just invent a few people in your region and watch the money roll in.

You want more than one kid?

Just have two, but don't tell anyone.

The parents, fearing the authorities, had simply kept the children at home and not informed the government.

What about if your grandpa dies but you want to keep collecting his pension?

Or just don't tell the government that he's dead and keep cashing the checks?

Easy.

Are you a family planning official trying to justify continuing the one-child policy you championed?

Just twiddle with a few metrics and watch the numbers go up.

Thanks to all this meddling, some experts like Professor Yi Fuxian think the government was overestimating their population by 10%,

creating more than a hundred million imaginary people, mostly young imaginary people.

In 2013, the new Chinese president Xi Jinping started to unwind the policy.

Couples will be allowed to have a second child if either parent has grown up as an only child.

Then everyone was allowed to have a second child.

But

there was a problem with that.

I think the only one child is enough for us.

The millennials were the best educated, most fawned over Chinese generation ever.

And they wanted to raise their kids as little emperors too.

Professor Yi Fu Xian said people didn't want more kids.

And even if they did, they now couldn't afford it.

If I have a second child, this apartment will be too small.

We'll need to move somewhere bigger.

A top family planning official had projected that dropping the policy would lead people to start having four child families again.

Problem solved.

But people did not start having four kids.

When the one-child law was finally abolished, China experienced a small jump in the birth rate in 2016.

But that was followed by a drop the next year.

In fact, the birth rate continued to fall.

Yi Fuxian had been right.

In a panic, the Chinese government unbanned Yi Fuxian's book, cancelled his arrest warrant and asked him to tour China talking about his findings.

They hoped that it would help convince people to have more kids, but it didn't.

Things got worse.

As recently as 2019, the UN projected that China's population would continue growing and wouldn't peak until the 2030s, but they quickly realized that was wrong.

In fact, it peaked in 2022.

Now, the population is shrinking, causing a shudder through the economy, which was expecting several more years of growth.

growth.

So maybe you've been thinking, yes, yes, but when are you going to tell me what all this has to do with property and money and economic crises?

Well that'll be now.

See, big property companies were building homes for the next generation of workers.

They've been borrowing hundreds of billions of dollars to build the apartments, confident that people in their 20s were about to leave home and buy them.

The Chinese property industry is the biggest in the world.

Fitch Ratings calls it the world's most important sector.

It was a Ponzi scheme.

It needed people to keep buying in and driving up prices, otherwise it wouldn't be able to pay off its debts.

But the industry was building empty apartments for imaginary people.

And cost of living pressures are hitting the non-imaginary ones.

And now it's starting to crash.

And this is having an impact in Australia too.

See, apartment buildings are built with steel and steel is made from iron ore.

So what does this mean for the country that makes its living selling iron ore to China?

Well

that's why the ABC has a business news department.

As China's demand keeps slowing, there'll be less need for iron ore from the Pilbara and that's likely to see the price keep falling.

The whole thing is looking bad.

Just how bad is it?

I'm going to say it's quite bad.

Louise Liu from Oxford Economics thinks it's quite bad.

Unless we see a meaningful turnaround in the property sector, it's quite hard to see a meaningful turnaround in consumer spending.

So, will we see a turnaround?

Michael Every from Rabbobank says no.

I don't think there is a way back.

Population growth in China is over and the debts that Chinese companies took on during the growth years are catching up with them.

As apartment buildings are knocked down, the world is watching on, hoping that China's economy doesn't topple as well.

This episode first aired in August 2023.

It was written by me.

The series producer at the time was Yasmin Parry.

On Tuesday, I'm going to be chatting to ABC Environment reporter Peter Dekryev about a rabbit hole that he fell down.

It involves a bizarre plot to smuggle the tissue of a rare bighorn sheep into the United States and clone it.

The story actually inspired the new series of Radio National Science Fiction podcasts, which is all about cloning and genetic technology.

We'll also get into Barbara Streisen's clones of her dog and that video of Putin and she talking about organ transplants.

Don't forget we are planning a Q ⁇ A episode for when we're back.

Don't be shy, record us an audio message or write us a text message and email it to us at ifyourelistening at abc.net.au.

I'll catch you on Tuesday.