Richer China: GDP understated by US$ 300b

The error is due serious understatement of data on the nation's sizzling services sector.

Beijing (AsiaNews/SCMP) – China's GDP has been understated by as much as US$ 300 billion, the country's first nationwide economic census has discovered.

The sum, equal to nearly 20 per cent of last year's US$ 1.65 trillion GDP, highlights the serious understatement of data on the nation's sizzling services sector, according to mainland economists who have been briefed about the census results.

The central government is expected to announce the findings soon.

These key findings, together with other census results, mean the National Bureau of Statistics will have to revise upwards a range of economic data, including GDP figures.

Officials from the bureau declined to comment yesterday, saying more census findings would be released later this week and early next week.

The bureau has scheduled a press briefing on December 20 to "explain the first national economic census and revisions of the GDP data for 2004 and historical figures based upon the census results".

It is believed that this and new census figures will be used to revise economic data for the past 10 years.

Last year, the mainland's GDP officially stood at 13.65 trillion yuan, of which the services sector rang up 4.34 trillion yuan, contributing about 29 per cent to GDP growth.

In the past decade, China's GDP has averaged an annual growth rate of 8.7 per cent.

China first undertook major revisions of its GDP data in 1995 following its first census on the then fledgling service industries. The findings prompted the bureau to revise upwards economic data covering the years from 1978 to 1993. But since 1995, the services sector has made further rapid progress.

Last year, China launched its first economic census covering service industries and the so-called secondary industries which include mining, manufacturing, electricity generation, gas and water production, logistics and construction. The aim was to obtain more accurate figures and better sampling to reflect the true nature of Chinese economic growth. The finding about the true scale of the service industries has confirmed long-held suspicions of both Chinese and overseas economists that the size of the Chinese economy has been seriously understated.

Economists said China's national accounting system emphasised physical production of goods, while non-tangible economic activity in the services sector tended not to be fully captured in the collection of data.

Current methods used to measure services sector output were very crude and outdated, resulting in the serious understatement of their contribution to GDP, they said.

In addition, China had little experience and insufficient data in measuring output from a wide range of booming services sector components - such as law firms, accounting firms, advertising agencies, consultants and securities brokerages.

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