China's GDP figures to be revised

[anthony_barker]

from yesterday's economist

GDP matters for great-power status. The bigger the economy, the bigger the military, the greater the geopolitical clout: annual GDP estimates were first introduced in America in the 1940s as part of its war effort... People should not mind, though. What matters for economic welfare is GDP per person.

Also from an old economist (2001) from some scientist doing research on the world fish market:

In China, a catch of 5.5m tonnes was expected in 1999; but the official figure was 10.1m tonnes.... When the pair replaced official statistics with estimates, the global catch showed a wobbly downward trend... That the Chinese figures are unreliable is hardly surprising, since until recently Chinese officials were promoted on the basis of production increases. What is surprising is that such a distortion of global statistics might be possible.

That is not to say by 2050 China will not be the world's second largest economy - it will be, just there is a tendency by government officials to make China appear more "glorious" than reality.

[Quest]

That is not to say by 2050 China will not be the world's second largest economy - it will be, just there is a tendency by government officials to make China appear more "glorious" than reality.

I think the skeptics now believe in the tendency of under reporting.

[Quest]

http://business.timesonline.co.uk/article/0,,13132-2010183,00.html

The final growth figure for last year is 9.9%. China's GDP now stands at $2.25 trillion compared to $1.67 trillion a year ago. US at $12.37 trillion, about 5.5x bigger.

US population (july2005): 295,734,134, China population (July2005): 1,306,313,812

US is 4.4x smaller.

US is 5.5 * 4.4 = 24.2 times better on average. China's richest 295,734,134, however, are probably doing much better than US * 1/24.2

On average, China grew 9.6% per year for the last 26 years. That means its economy increased 2.5 times per decade.

If China continues to grow at 9.6% per year, it will still need log(24.2)/log(2.5) ~= 3.48 decades to reach the current US per head level. But, if China ever catches up with the US per capita level, its total economy will be 4.4x bigger, in today's perspective that would mean US $12.37 trillion vs China $54.43 trillion. dream on.....

[gato]

The final growth figure for last year is 9.9%. China's GDP now stands at $2.25 trillion compared to $1.67 trillion a year ago.

A jump from 1.67 to 2.25 is a nearly 25% increase. Is there a mistake here?

[Quest]

A jump from 1.67 to 2.25 is a nearly 25% increase. Is there a mistake here?

I got the # from that site.

"With the economy now valued at $2.25 trillion (£1.26 trillion), excluding inflation, the announcement from the National Bureau of Statistics puts China marginally ahead of the UK, at about $2.07 trillion, although the final order will depend on the exact figure for inflation throughout the UK economy last year."

[ala]

China's global trade exceeded $1 trillion ($1.15 trillion) in 2004, but if considered a single unit, the European Union has the largest economy in the world with a GDP of 13,123,116 million USD equivalent PPPs. The EU economy is expected to grow further over the next decade as more countries join the union - especially considering that the new States are usually poorer than the EU average, and hence the expected fast GDP growth will help achieve the dynamic of the united Europe, but Europe is still divided by borders and politics. Chinese have the second largest in the world when measured by purchasing power parity but measured in USD-exchange rate terms, it was the 6th largest [/b']- however the most powerful economy is still the USA, the United States has the largest and one of the most technologically advanced national economies in the world.

Hehe, your data is out of date already. China as of the end of 2005 is now the 4th largest economy in the world (based on USD exchange rate) after United States, Japan and Germany.

[ala]

I think excluding inflation is the keyword/s, yea I wasn't aware of that, so it's probably not $2.25 yet.

Well, UK's current data doesn't include inflation either.

From the Financial Times:

"[China's] consumer price inflation was a moderate 1.8 per cent in 2005, down from 3.9 per cent in 2004."

[Jose]

A jump from 1.67 to 2.25 is a nearly 25% increase. Is there a mistake here?

That's the consequence of the revision of the official data I mentioned in the original post in this thread. The GDP figure has turned out to be 20% higher than it was thought to be. That's apart from the growth this year.

Reading the posts in this thread, I am surprised by the blind faith people seem to have in the current exchange rates holding in the long term. All those calculations pointing that China needs four decades of extremely strong growth to reach the US are based on the idea that the current exchange rate of 8-odd yuan to the dollar will hold forever. That doesn't look likely. Most analyses hint that the renminbi is undervalued, and the loss of global influence of the US coupled with the huge American deficit can bring down the value of the US dollar at any moment. A dramatic change in exchange rates would bridge the gap betwen China and the US (and Japan and the EU) in a much shorter time.

[Quest]

Quote:

That is not to say by 2050 China will not be the world's second largest economy - it will be, just there is a tendency by government officials to make China appear more "glorious" than reality.

I think the skeptics now believe in the tendency of under reporting.

I just ran across this article, thought I would link it here, just to substantiate my previous post:

http://www.boston.com/business/articles/2006/01/26/chinas_economy_expands_by_99/

Chinese economic data are notoriously unreliable, and some economists questioned whether the figures understate real growth, given a nearly 30 percent surge in exports and strong domestic spending. The 9.9 percent figure ''doesn't quite capture it," said Stephen Green, senior economist at Standard Chartered Bank. ''One could say that 9.9 percent is a very convenient number; it's not 10 percent. Ten percent might scare people, and might create more trade friction with the US."

[ala]

2005 will probably be revised to 10%+ in a couple of a months. Same thing happened for 2004. Domestic part of the economy is doing well, this is good news for China.

[Quest]

Guangzhou GDP per capita reached $8,500 USD in 2005, expected to grow 12% this year.

http://www.gd.xinhuanet.com/newscenter/2006-01/16/content_6054972.htm

[roddy]

Does anyone know how they calculate GDP per capita for provinces? Surely Guangzhou in particular has a lot of migrant workers? Are they included in the population?

[Quest]

Just imagine what would happen if the renminbi were to appreciate to twice its current value. All of a sudden, China's GDP would be 4 trillion dollars. Now this sort of change in the exchange rate won't happen overnight, but it could perfectly well happen over a period of 10 or more years, and this factor must be combined with the growth in GDP.

2 years later, that's exactly what happened. China's GDP has surged from 2.2 trillion to 3.2 trillion USD according to the IMF, and estimated to reach 3.7 trillion by the end of 2008, overtaking Germany, and soon Japan much earlier than previously predicted.