China to revise GDP up by $300bn

But such a move will again bring into question China’s ability to report its economic statistics accurately and further unmask a government already obsessed with controlling how the media and public view the huge nation, they said. 

Stephen Green, an economist with Standard Chartered, said in a research note: “As if China’s economy was not growing fast enough, thanks to a statistical revision, growth in 2005 looks like being about 30%.”  

China’s National Bureau of Statistics is expected to announce on Tuesday the results from the country’s first nationwide economic census, which, according to Hong Kong’s South China Morning Post, will show that China’s GDP has been understated by about $300 billion.

“The recent national economic survey has apparently found
another 2.4 trillion yuan ($296 billion) worth of output,” Green said. The figure is equivalent to 17.5% of last year’s GDP. 

Baseless reports

“Most of the extra output is in services since the statistical apparatus is not that good at measuring the sector,” Green said. 

“The change will also affect our understanding of investment. It is still growing fast, but the economy should become a little less dependent upon it.”

“The specific GDP figures will be published on 20 December. What has been reported in various media is baseless” Spokeswoman for China Economy Census Office

Officials from the statistics bureau refused to comment, but a spokeswoman for the cabinet-level China Economy Census Office, the office that took the census, said such media reports were “baseless”. 

“The specific GDP figures will be published on 20 December. What has been reported in various media is baseless,” said the spokeswoman, who refused to identify herself.

Green said the revised figures would greatly bolster per-capita GDP, while lowering China’s external debt in terms of its percentage to GDP as well as the country’s burdensome non-performing-loan/GDP ratio.

“The IMF (International Monetary Fund) was looking for domestic debt at year-end 2005 to be worth 19.6% of GDP. That can now be revised down to about 16%,” Green said.

Intentions questioned

Other analysts agreed that the revised figures would allow the Chinese government to spout more good news about its booming economy, but expressed caution about the intentions behind the move.

“The government has been criticised for over-investment, so this will make the investment a smaller percentage of GDP. Also they want to sustain optimism, especially optimism among foreign investors”  Andy Xie, chief Hong Kong-based Morgan Stanley economist

Andy Xie, chief Hong Kong-based economist for Morgan Stanley, said: “They are making this announcement for two purposes. The government has been criticised for over-investment, so this will make the investment a smaller percentage of GDP.

“Also they want to sustain optimism, especially optimism among foreign investors.” 

Xie said political factors had always influenced how the government issued economic statistics and under-reporting had been routine in recent years as the central leadership tried to talk the economy down from a period of overheating.

“There is a real element to the revised GDP and there is also a propaganda element to keep [economic] optimism and to serve the purposes of the government,” Xie said.

“You always have to try to assess these things – how much is attributable to real elements and how much is attributable to the political needs of the government, but it can be very difficult to evaluate.”