China's economy is bigger than previously reported

Knight Ridder News Services ^ | December 16, 2005 | Tim Johnson

[Paul Ross]

China's economy is bigger than previously reported

By Tim Johnson, Knight Ridder Newspapers, Dec. 16, 2005

BEIJING - China's economy may suddenly catapult past those of Italy, France and Britain in size. How suddenly could the leap occur? Try Tuesday.

That's when China's National Statistics Bureau will announce a revision of economic growth figures that's expected to push China from the world's seventh-largest economy to No. 4.

It's more than statistical sleight of hand: Economists in China say they've discovered about $300 billion worth of economic output, mainly in the services sector, that they couldn't measure before, an amount worth 17.5 percent of last year's output.

The revision essentially moves up the day when China may surpass Germany and Japan and catch up with the United States in terms of economic output.

"China may become the world's largest economy much earlier than 2041, which was projected by our ... report in 2003," a research arm of the investment bank Goldman Sachs said in a report out of Hong Kong this week.

The report says the amount that China will add to its economy isn't a negligible sum. It's equivalent to "the size of Taiwan's economy, or half of India's economy."

One economics professor in Beijing, Yang Fan, said he wasn't at all surprised that the services economy in China was larger than previously estimated, in part because the informal economy thrived.

"Many small companies, like restaurants, evade taxes. They may not have legal registration. So it is hard to collect information on them," said Yang, an economist at China University of Political Science and Law.

Moreover, smuggling and counterfeiting of consumer goods, as well as the sex trade, are major underground businesses in China, difficult to measure in terms of economic value, Yang said.

Per capita economic output - or gross domestic product - will jump from $1,277 in 2004 to about $1,738 this year, according to a report Thursday by Standard Chartered Bank's Shanghai branch.

According to Standard Chartered's calculations, the new figures will allow China to leapfrog Italy and France this year in terms of the size of the economy. With an 8 percent fall in Britain's pound sterling relative to the dollar this year, "China will be bigger than the U.K. economy in U.S. dollar terms, too," the report said.

China's currency, the renminbi, has risen by about 2.5 percent against the dollar this year, adding to the size of its economy.

The statistical revision follows a first-ever National Economic Census, which gathered data from 4 million industrial enterprises and 30 million private businesses, the National Statistics Bureau said.

China's economy has been growing at an average 9 percent a year since the late 1970s, a rate of sustained growth never before seen in a major world economy.

The refiguring of the GDP may prove to be a political boost to China's leaders, who can claim they're closer to a target of achieving per capita output of $4,000 by 2020.

"It's a good thing. It will strengthen China's international status in the world," Yang said. "Actually, I think it should be even 20 percent higher. Why? Because the renminbi is still undervalued by about 20 percent."

[tet68]

Ya know folks, if their economy is greater than previously
thought, that means their "Defense" spending is greater
than previously thought...

Hmmmmmm?

[RightWhale]

Other countries could do the same if they counted their shantytown and other extralegal wealth.

[ndt]

"Economists in China say they've discovered about $300 billion worth of economic output,"

Man, I wish I could misplace 300 billion dollars. Thats a mighty big sofa cushion.

[muawiyah]

China had the world's largest economy a mere 200 years ago. Then they had a serious run of social and political disasters from which they could not readily recover.

[Paul Ross]

"It's a good thing. It will strengthen China's international status in the world," Yang said.

A'hem, pardon me if I differ, and conclude for myself that this is NOT a good thing.

And then he goes on to brag some more:

"Actually, I think it should be even 20 percent higher. Why? Because the renminbi is still undervalued by about 20 percent."

Based on purchasing power parity, that is still way too small an adjustment. Hence, if followed to its logical conclusion, their economy is vastly bigger still...and yet, at a 5-to-1 trade differential..it's still not buying anything from U.S. factories. And this is a dynamic process where the U.S. position continues to erode. I.e., yet still more U.S. manufacturing is falling into their economic event horizon, the proverbial "2nd Wave" of outsourcing is getting started.

[WestSylvanian]

Meanwhile, we're dumping billions down the drain in some harebrained scheme to bring liberal democracy to Iraq and make the world safe for democracy a la Woodrow Wilson.

And we're buying Chinese goods which is creating their booming economy. What are they buying from us? Zilch. They're arming to the teeth because they believe they're going to have to go to war with us. Bush better focus on this before it's too late.

[Last Dakotan]

"Actually, I think it should be even 20 percent higher. Why? Because the renminbi is still undervalued by about 20 percent."

Ahhh, there's the problem.

[Brilliant]

"they've discovered about $300 billion worth of economic output..."



The black market always produces more than the legal economy in a socialist state.

[Brilliant]

China's currency, the renminbi, has risen by about 2.5 percent against the dollar this year...

Reading the newspapers, you'd think it had tripled.

[America's Resolve]

Uh huh.

They're stooges of Communist Dictators who don't have to stand for reelection. They can tell any kind of lies that they wish to and suffer no consequences.

Because of the numbers the soviets put out, we were assured that their economy was as large as ours was. In actuality, it was about 25% the size of ours.

Anybody who believes word one from a commie stooge is a fool.

[WilliamofCarmichael]

per capita output of $4,000 by 2020

Gee, I hope that the 800 million peasants outside of the special economic zones finally get to share some of the wealth.

[NZerFromHK]

I agree, and anyone who talk about the contemporary PRC economic figures and yet fail to mention He Qinglian, the famed economist who was forced to flee China over her oppisition to use falsified statistics, is a fool.

(Don't know who He Qinglian is? Here's the info and a sample article she wrote in 2000:

http://cosa.uchicago.edu/Socialstructure.htm )

[yankeedame]

China's National Statistics Bureau will announce a revision of economic growth figures that's expected to push China from the world's seventh-largest economy to No. 4.

....Economists in China say they've discovered about $300 billion worth of economic output, mainly in the services sector, that they couldn't measure before, an amount worth 17.5 percent of last year's output.

I see. So, have they let any non-Chinese economist and/or financial experts take a look at these facts and figures? I see.

And this right on the heels of China declaring that the Romans got the idea for their wall from the Great Wall of China.

[America's Resolve]

Thanks for the link!

The Propaganda Department of the Central Committee of the CCP

Let the people who blindly accept the CCP's numbers roll that around on their tongues and minds for a while.

It may be a LITTLE more capitalistic, but the old forms and the old structures still exist and are used.

[Brian Allen]

<< They're stooges of [Psychopathologically-hesperophobic, murderous bloody gangsters and wannabe warlords posing as] "communist" dictators who don't have to stand for reelection. They can tell any kind of lies that they wish to and suffer no consequences.

Because of the numbers the soviets put out, we were assured that their economy was as large as ours was. In actuality, it was about 25% the size of ours.

Anybody who believes word one from a commie stooge is a fool. >>

Absolutely.

And anyone who believes the Peking predators' projections to be even remotely close to as accurate as was the soviets', is either an ignoramus or is as much a delusional fabulist as is every "communist" chinese "economist!"

[Paul Ross]

Anybody who believes word one from a commie stooge is a fool.

You have just correctly labeled all those who advocate the "massive China Market" and the NEED to Outsource to it at ALL Costs, in order 'to get a taste' of the action.

[Hermann the Cherusker]

Moreover, smuggling and counterfeiting of consumer goods, as well as the sex trade, are major underground businesses in China, difficult to measure in terms of economic value, Yang said.

I love this line. Why, if we only counted drug smuggling, gun running, resale of stolen merchandise and pimping, the economy of the typical US ghetto would look just great!

Caution, New Economcy In Gestation! Quiet Please!

[Paul Ross]

Yes, it smacks of the same kind of 'phantom' economic thinking that goes into our own Bureau of Labor Statistics coming up with the reasons to downplay inflation with abitrary "deflators." I.e., steak goes up, then don't count it. Assume that the average person is switching over to Hamburger, which is going up a bit less....

The price for Houses, new and old, are going through the roof across the country, hence, let's just throw them out, and just use the lagging indicator of rents...

[Paul Ross]

China's economy may suddenly catapult past those of Italy, France and Britain in size.

Note that Britain was just forced to slash its small navy...in half...from 44 ships to 22. Meanwhile China is going much further the OTHER WAY. Your observation is being vindicated that:

Ya know folks, if their economy is greater than previously thought, that means their "Defense" spending is greater than previously thought...