Posted on 12/18/2005 6:09:15 AM PST by snowsislander
BEIJING: China is likely to declare itself the world’s fourth largest economy next week, having leapfrogged Italy, France and Britain, helped by a likely huge revision of its gross domestic product figures. Economists say the National Bureau of Statistics (NBS), which is due to release part of the results of its first national economic census on December 20, is likely to put a much bigger figure on the size of China’s services sector.
The South China Morning Post, citing unnamed economists, reported on Tuesday that the agency would probably revise GDP by as much as $300bn, or about 20% of 2004 output. A revision of that magnitude could catapult China from the world’s seventh-largest economy into fourth spot, now occupied by Britain.
Jim O’Neill, chief global economist at Goldman Sachs in London, said China could attain that status even without such a big revision based on growth rates and currency changes in 2005.
Not only has China grown far more quickly than Italy, France and Britain this year, but the yuan has risen about 2.5% against the dollar, further boosting its output when measured in dollars. The euro and sterling, by contrast, have fallen.
“China could squeak in ahead of Britain even without a revision,” O’Neill said. “It just goes to show how much it’s contributing to the world economy.”
Economists said an upward revision of 20%, as reported by the Hong Kong-based South China Morning Post, would be in line with their own estimates – or could even be too modest.
Chen Xingdong, chief China economist for BNP Paribas Peregrine in Beijing, said he would not be surprised if the NBS revised up its estimate of China’s GDP, which totalled $1.65tn in 2004, by 15% to 20%.
China’s number-crunchers have failed to capture the boom in small and medium-sized industrial enterprises, Chen said. “We always argue that it has been largely underestimated for a long, long time,” he said. “Even a number like 15% is not that large for us.”
Dong Tao, chief economist for non-Japan Asia at Credit Suisse First Boston (Hong Kong) Ltd, said China’s GDP would still be understated even if it was revised up by $300bn.
“There’s a massive under-reporting of GDP in the service sector,” Tao said.
He cited the relatively low quality of data collection in China as one reason for that. Economists have long pointed to shortcomings in China’s statistics, due to a central planning legacy that put priority on collecting data on the production of physical goods from state-owned enterprises.
Tao said another reason was that many service enterprises fall through the statisticians’ net because they fail to report income for tax reasons. “Just take a walk into any restaurant in Shenzhen or Beijing. If you buy a meal without asking for the receipt, for tax reasons these things will not be in China’s GDP,” he said.
Still, Tao said that, on CSFB’s calculation, China would probably need another year before it could catch up with Britain, whose GDP totalled $2.14tn in 2004, according to the World Bank.
France came fifth in the World Bank’s rankings, with 2004 GDP of $2.00tn, and Italy sixth, with output of $1.67tn. The US, followed by Japan and Germany, topped the list. – Reuters
God, for a minute there I thought the article was trying to tell us something.
Fellow Freepers!!!!! Please put this statistic in your hat and blow it out to any other America haters among us.
UNITED STATES GDP: $ 11,750,000,000,000
Notice the article doesn't tell you that...
This is and always will be the greatest country in the world.
When its child killing policies result in the breakup of China into its component parts, they'll fall back to their rightful place of poverty and obscurity on the list of prosperous nations.
Hmmm. Britian has a population of about 60 million. China- one billion. It demonstrates the power of a freedom right there that such a comparatively small country can have so much more economic power than such a populous one.
I would like to see us cease all normal trade relations with China, a disgusting totalitarian state. And if that happened to trigger enough internal dissent to dissolve the PRC, all the better. China's government is the enemy of its people, and I would very much like to see it disappear from among the governments of this world.
China's history would lead one to think that another divided period could occur next; however, China is prosperous, and I myself cannot think of an instance where a large and prosperous totalitarian state anywhere in the world has fallen to internal forces to be replaced by more representative government.
Hmmm. Britian has a population of about 60 million. China- one billion. It demonstrates the power of a freedom right there that such a comparatively small country can have so much more economic power than such a populous one.
Ditto, many Americans do not realize the sheer mass of our wealth compare to the distant second nation in the world. Historically this is unprecedent in world history since the Roman Empire and Han/Tang Dynasty.
How much exactly is "$1.65tn" ? How many tn's in a dollar?
It is short for $1.65 trillion, or $1,650,000,000,000. For comparisons, it is a bit above half of our predicted federal budget outlays for 2006 ($2.568 trillion predicted here), and about 1/8th the predicted size of the U.S. GDP in 2006.
That's simply not true. Products still say MADE IN HONG KONG. China makes vast amounts of high tech goods.
You are correct about US GDP. However, the economics of nations do not stay the same forever, some nations do improve their lot in life.
Lets consider a few things. If one were to measure GDP using what they call purchasing power parity (PPP), then China jumps to the number two spot (roughly 7 trillion, with an exchange rate of 8 yuans to the dollar).
Official GDP's are based on dollar value. As China acquire more dollars and the US goes into debt, those debts will unlike be paid off. So what happens is that there will be an adjustment one way or another. And one way an adjustment would be made is the raising in value of China's currency (which people are clamouring for anyway).
Also, another way a country strengthens it's value is through the acquisition of technology and thereby giving it a higher value of return for every hour worked.
Also, there are certain types of environments that money is drawn to. One is political and social stability and a financial system that people can trust. There is considerable money parked here in the US. But as China develops a better banking system and other means in which money can move around, their economy will strengthen because investments will flow to China in greater numbers than today.
At the moment, China's economy is based on labor intensive, export orient manufacturing. Something alot of third world countries are doing anyway.
But things are changing there. And if those changes do take place, China could surprass the US as the world's largest economy in two to three decades.
Also, one more thing I would like to add, to simply state the strength or the positives of China does not mean one is a America hater. To speak well of your neighbor does not mean you hate your own family. Projecting that China become an economic super power larger than the US is not slanderous towards America, it's simply stating that a coutry with 4 times the US population could potentially become the wealthiest nation on earth. It doesn't take away from the US. The US is very likely to be much wealthier 30 years from now than it is today. However, it could be moved to the number 2 position in the world. So if Americans are better off in the next generation, why should it bother anyone that China moves to the number one spot? China has a right to develop a modern economy and improve the standard of living of it's own people and enjoy the fruits of hard work.
....then China jumps to the number two spot (roughly 7 trillion, with an exchange rate of 8 yuans to the dollar).
Should read:
....then China jumps to the number two spot (roughly 7 trillion).
You are correct that this is the most popular measure among economists. If I don't miss my guess, you are using the CIA World Factbook numbers for GDP per capita, which are converted via a PPP rate rather than an actual exchange rate. I happen to prefer real exchange rates (which puts the U.K. at $35,736 for 2005 (from here and the current Bloomberg rate of $1.77 per pound), and China at considerably less than $6,000).
For what it is worth, another implication of using PPP rates for GDP would mean that with China's new-found GDP statistics that it is already growing close to the U.S. GDP when adjusted for such PPP.
Thanks, I mistakenly assumed that the World Factbook numbers were in actual exchange rate.
Dick Morris wrote a great article on this subject a few months ago.
I agree with you, people will park their money where it's safe, but sooner or later an affuent society gets the taste of the good life esp the middle class and they want more freedom.
The labor intense stuff that China is doing can be done here with robots and eventually will.
Bush is right, in that a free world is best for our and the world's security...
I always point out to people that are amazed at China's manufacturing power and intelligence that the high tech goods that say MADE IN CHINA once said MADE IN HONG KONG.
That's simply not true. Products still say MADE IN HONG KONG. China makes vast amounts of high tech goods.
Yes, and I believe that people in China will continue to push for more voice in the direction of their country as they become more affluent.
The labor intense stuff that China is doing can be done here with robots and eventually will.
Depends on what it is. Robots have been around for decades and have been used very successfully in auto manufacturing. But some industries, like textiles, still require alot of human labor. However, regardless of what gets automated, I doubt China will stay dependent on labor intensive industries forever. As the educated work force grows and becomes more experienced in tech industries like biotech, computers, and aerospace and in service industries like banking and insurance, China will become less dependent labor intensive industries.
Bush is right, in that a free world is best for our and the world's security...
Yes, that is true. And I believe China to be heading in the direction of a freer society that will someday lead to democracy.
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