China to revise size of GDP
China is poised to announce its economy is significantly larger than the government’s official measure following a national economic census which found a large underestimation of the country’s thriving and largely private services sector. The revision is also expected to show the economy is less reliant on investment and more driven by consumption than previously projected, two trends that Chinese leaders have been trying to encourage.
A spokesman for the National Bureau of Statistics said Tuesday it would announce the findings of the census and its impact on the calculation on GDP at a press conference in Beijing next week. The NBS refused to say by how much it would revise the GDP figures, but it is expected that the new measure could show the economy was larger by about 20 per cent.
Two large caveats to this type of report. China is still a Communist country, with central planning. That suggests that any report be taken with a grain of salt. In addition, the “underground” or unmeasured economy is probably much greater than the central planners believe.
If the Chinese are using a fairly accurate model, valid estimations and projections, 20% is huge. And the indication in the story that the Chinese economy is much more of a consumption economy than had been believed is also huge. Recall, though, there are enough Chinese and their economy is still small enough, that an average change per individual that is small will have a large echo in the overall economy.
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