Peoples’ Daily:

Lehman Brother [sic] has issued the latest review of Asian economy (Japan not included), saying that China is likely to become the world’s fourth largest economy in 2005. The review points out that according to the nation’s first one-year-long national economic census, China’s 2004 GDP has been revised to 1.93 trillion US dollars, 278 billion US dollars (equivalent to the entire Indonesia’s) more than that provided earlier. The comment says, according to our calculation, the Chinese economy will at least bulge at least to 2.2 trillion US dollars, surpassing France and even Britain, to be the fourth largest in the world.

We are interested, to say the least, in a GDP revision for 2004 from $1.65 to $1.93 trillion, 18% or so. Either Lehman Brothers is torturing China’s GDP statistics, or China does not have control of its own numbers. We’ll await clarification.

UPDATE

The Economist’s take:

The revision of China’s GDP figures was of an order reminiscent of Mao’s liberal adjustment of statistics to show his campaign was on target. Now, however, it is the higher figure that is the more credible one. Economists have long believed that China’s GDP has been considerably understated thanks mainly to poor measuring of privately run services. The country’s first economic census, launched in January, showed that in 2004 it was some 16.8% bigger than the previously announced figure of 13.7 trillion yuan ($1.7 trillion).

In dollar terms at official exchange rates, this means that China replaced Italy as the world’s sixth-biggest economy last year. In 2005, it almost certainly surpassed France, and probably squeaked past Britain too. It adds some $284 billion to China’s GDP for last year, a figure almost the size of Taiwan’s total.

The survey also confirms some long-held suspicions about China’s economic make-up: that its service sector is bigger than the one-third of GDP suggested by the old figures (the new data show more than 40%), that consumption is also higher and that investment and savings as a proportion of GDP are lower. This lot of figures look more sustainable than the old lot. But they are still only a best guess at the truth.

Who knows what the truth is?

This entry was posted on Tuesday, December 27th, 2005 at 9:21 am and is filed under China, General, business. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.