China sharply increases economy’s official size, surpasses Italy as No. 6 world economy | VailDaily.com
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China sharply increases economy’s official size, surpasses Italy as No. 6 world economy

BEIJING – China sharply raised the official size of its economy Tuesday after taking into account emerging service industries, saying its output last year was 16.8 percent higher than previously reported.The new figures mean China’s mainland overtook Italy as the world’s 6th-largest economy in 2004, behind France and the United Kingdom. China would jump to No. 4, after only the United States, Japan and Germany, if it included Hong Kong, a Chinese territory that reports its economic figures separately.The data could have far-reaching effects on economic and social policymaking as Beijing tries to create new jobs for unemployed workers and plans investments.The new Chinese output tally of 15.987 trillion yuan ($1.981 trillion) followed a survey meant to gather more accurate data on restaurants, retailers and other service businesses, which were underreported previously.”These new figures give us a clearer picture and a better way of understanding China’s economy,” Li Deshui, director of the National Bureau of Statistics, said at a news conference. “Based on these figures, we can have even more confidence in our long-term fairly fast and sustained economic growth.”The new figures should not affect China’s policy toward the politically sensitive exchange rate of its currency, Li said. China’s trading partners complain that its government-controlled exchange rate is too low, giving Chinese exporters and unfair price advantage.The government plans to revise growth figures back to 1993 for its gross domestic product, the widest measure of its output of goods and services, Li said.Economists have long said China’s already stunning official figures showing annual growth above 9 percent in recent years understate the size of its economy due to old-fashioned data that focused on manufacturing and undercounted services.”These new GDP data are a major improvement over the previous ones,” Bert Hofman, the World Bank’s chief economist in Beijing, said in a statement. “Many policy issues that the government wants to tackle … need reliable data for those issues to be assessed correctly.”Other governments have reported similarly large jumps in output when they change the way they measure their economies, including a 17 percent increase for Indonesia in 2004 and 11 percent for Norway in 1995, the World Bank statement said.The new estimate of China’s economic output in 2004 was an increase of 2.3 trillion yuan ($285 billion) over the figure previously reported, Li said.Service industries’ share of economic output jumped from 31.9 percent to 40.7 percent, Li said. He said the survey found smaller increases in output from manufacturing, farming and other economic sectors.Economists say such a change could prompt Beijing to rethink plans to encourage laid-off workers to seek jobs in what it had thought were underdeveloped service industries.Despite the sharp upward revision of its gross domestic product, China still ranks below the top 100 countries in economic output per person, Li said.”We still have a long way to go to catch up with the developed countries,” he said.Li defended his agency’s earlier data, saying they “do not distort the size of the national economy” and didn’t mislead policy-makers.”It would still reflect the general level and the trend in economic development,” he said. “We still can have a good picture of the basic conditions in China and its development. There is no fundamental change of the overall picture.”


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