China’s economy might be bigger than previously thought

[JSCh]

China’s economy might be bigger than previously thought
By Asia Unhedged on September 22, 2015 in Asia Unhedged, China

If you’re looking to turn your world upside down today, try this on for size. What if China’s economy is actually bigger than everyone thinks?

Did your head just go “Boom?” Well, then maybe this will blow your mind: The Wall Street Journal is putting forth that idea. Yes, one of Western media’s biggest proponents of China’s heading for a hard landing, thinks that China’s government isn’t over reporting economic statistics, but instead, underselling them.

It seems a study by Daniel Rosen and Beibei Bao for the Center for Strategic & International Studies says that the $10 trillion economy China reported last year is actually closer to $11.5 trillion.

The study says China calculates gross domestic product using an antiquated methodology that undercounts expenditures on things like services and research and development.

Recently, the European Union and the US saw their economies grow in size after revising their respective methodologies to the latest global standard. The study applied the same revision to China’s economy and said if the services sector was bigger that would justify lower levels of electricity generation.

Of course, WSJ couldn’t leave it at that.

“But a bigger economy isn’t necessarily as bullish an assessment as it sounds. Debt-to-GDP levels would be a bit lower, but not meaningfully enough to matter,” said the paper.

More jobs in the service sector could indicate inequality worse than already thought. And if real estate is actually bigger percentage of the economy than recorded, then the recent-weakness in the real-estate sector would have a bigger impact on the economy than already thought.

If China is a lot bigger than currently thought, the study suggests it has the potential to surpass the size of the US economy as early as 2020. Of course, that works on the flipside as well. Any downturn in the Chinese economy will have a greater effect on the global economy.

China’s economy might be bigger than previously thought | Asia Times

 

[PAKISTANFOREVER]

Lol............I love China and it's people but the Chinese seem to be getting more advanced, powerful and bigger in every aspect and sphere of life every second. We could do with some of that in CPEC.......Well done Chinese brothers & sisters.....GO CHINA GO!

 

[Beidou2020]

Martin has already discussed this topic.

 

[UKBengali]

China will surpass US in nominal GDP by 2020.

What will be interesting is just how much the US GDP shrinks in the 2020s
to take into account that it will no longer be the dominant economic power in the world.

 

[JSCh]

Old indexes do not present true image of growth
By Chen Jia
China Daily, September 26, 2015

In response to analysts' and media questions about the reliability of China's economic data, a government spokesman said on Friday it is no longer appropriate to use only the old indexes to measure the country's performance during its rapid transition.

This is because, for the first time, the service industry has been contributing a larger share to China's GDP growth than the manufacturing industry, said Sheng Laiyun, a senior official of the National Bureau of Statistics.

People wouldn't get the full picture of the Chinese economy if they still tried to size it up by using such indexes as the increase in loan supplies, in electricity generation, and in cargo throughput, said Sheng, who joined the NBS after obtaining a doctoral degree in economics.

Based on the economy's full reality, the NBS said that China has managed to achieve a GDP growth of 7 percent in the first half of the year and is capable of maintaining roughly that growth rate in the third quarter.

In the first half, the service sector contributed 53.4 percent of China's total growth, compared with a contribution of 43.5 percent from the industrial sector, primarily manufacturing, and the rest from agriculture.

By contrast, in the same period last year, the service sector contributed 47.3 percent, while the industrial sector was still powerful enough to contribute 49.5 percent.

Sheng said the trend is accelerating that China's model of economic growth is transforming from an industry-driven model into a service-led one, and thus some traditional indexes are becoming less accurate and less representative.

The steady expansion of the service sector will help China achieve its growth target in the third quarter, Sheng said, adding that a 6.5 percent growth in GDP would be the lower limit of the Chinese government's tolerance.

For instance, he said, it would be wrong "to only use data about electricity consumption for the growth forecast, because electricity consumption in the service sector is about 20 percent that of the industrial sector".

He noted that some people said China's report of 7 percent GDP growth in the first half failed to match the country's electricity consumption, which showed a year-on-year increase of only 1.3 percent.

However, Sheng warned that China may face more complications, most noticeably in that the stock market rout in July and August may delay China's overall recovery, which the government had expected to emerge in the third quarter.

A research note from Barclays Capital said, "Developments since the second quarter continue to suggest China is experiencing a structural slowdown while facing strong cyclical headwinds.

"Meanwhile, the retail and service sectors remain the brighter spots, featuring the economic transition."

According to data from the NBS, retail sales growth was 10.8 percent in August, with online sales standing strong at an increase of 36.5 percent year-on-year. The service sector, including financial services, has been growing at a robust pace, registering 8.4 percent in the first two quarters, versus 6.1 percent for the industrial sector.

Frederic Neumann, an economist at HSBC Bank Holdings, said: "Sluggish global trade has largely been blamed on wobbly growth in China. But, if the country's shipments are softening, too, then something else must be going on.

"For all (critics') recent swagger, developed markets are hardly firing on all cylinders. So, don't just blame China. Everyone's got a role to play in keeping the world economy right side up," he said.

 

[Beidou2020]

China will surpass US in nominal GDP by 2020.

What will be interesting is just how much the US GDP shrinks in the 2020s
to take into account that it will no longer be the dominant economic power in the world.

Whether it comes to production or consumption, China is massive!

In production in pretty much every sector, China is number 1.

In goods consumption (automobiles, smartphones, tv, computers, etc) China is number 1 in many sectors.

It is in services consumption (movies, healthcare, financial, etc) where the US has a lead over China in many sectors.

As I said previously to Martin, China is now the largest manufacturing nation in the world. China is also the largest trading nation in the world (largest exporter and 2nd largest importer).

124 countries consider China as its largest trading partner.

Next stage for China is developing the service sector, continue to be a large global investor (both direct and portfolio), and increase the usage of the Renminbi.

China has already achieved scale, now it's about efficiency.

 

[badguy2000]

1.ChIna's GDP excludes virtual rent while virtual rent is 1/10 of USA's 17 trillion $ GDP,which is almost equal to india's total GDP.

2.besides useless virtual rent USA's GDP is full of many sections harmful to people's real life quality,such as overpriced lawsuit/medical care service and wallstreet poisonous bonds.

3.the real~wealth~creating sections(manufacturing,agriculture,mining and onstruction) in USA is now much less than CHINA Now.
For example, china has produced/consumed more concrete in the past 5 years than USA has in the past 100+ years.

4.with its mighty and efficient 'real~wealth~creating sections'(manufacturing,agriculture,mining and construction),china can afford massive infrastrctue upgrade for the world much more easily and efficiently than USA and the whole west world.
THAT is why china now can not only upgrade china's infrastructure world class,but also asskick west countries in global infrastructure market.
That is also why china could finish more expressways and highspeed railways in the past 15 years than the rest coutries combined have in the past 50 years.

5.china' mighty 'real~wealth~section' also provides high cost~performance industry products,food and house for chinese people.
That is also why chinese real life standard is higher than that in many countries with higher nominal GDP,such as brazil,mexico and turkey.

 

[TaiShang]

At the end of the day, let's keep in mind, China is a developing economy.

Despite of that, the other day, it pledged 2 billion USD for South-South development efforts.

Panda's soft touch.

 

[AndrewJin]

1.ChIna's GDP excludes virtual rent while virtual rent is 1/10 of USA's 17 trillion $ GDP,which is almost equal to india's total GDP.

2.besides useless virtual rent USA's GDP is full of many sections harmful to people's real life quality,such as overpriced lawsuit/medical care service and wallstreet poisonous bonds.

3.the real~wealth~creating sections(manufacturing,agriculture,mining and onstruction) in USA is now much less than CHINA Now.
For example, china has produced/consumed more concrete in the past 5 years than USA has in the past 100+ years.

4.with its mighty and efficient 'real~wealth~creating sections'(manufacturing,agriculture,mining and construction),china can afford massive infrastrctue upgrade for the world much more easily and efficiently than USA and the whole west world.
THAT is why china now can not only upgrade china's infrastructure world class,but also asskick west countries in global infrastructure market.
That is also why china could finish more expressways and highspeed railways in the past 15 years than the rest coutries combined have in the past 50 years.

5.china' mighty 'real~wealth~section' also provides high cost~performance industry products,food and house for chinese people.
That is also why chinese real life standard is higher than that in many countries with higher nominal GDP,such as brazil,mexico and turkey.

China has systematically underestimated those "virtual" GDP, it's a public secret, already fully discussed in our local economy forums. However, the statistics bureau of a county always publicise the true number of local GDP, but when it comes to provincial level, the number shrinks. When it comes to national level, the number is shrinking significantly.

At the end of the day, let's keep in mind, China is a developing economy.

Despite of that, the other day, it pledged 2 billion USD for South-South development efforts.

Panda's soft touch.

Exactly. China has city with GDP per capita more than $30,000, also has city less than $5000.

 

[cirr]

What about China's enormous "underground economy" which is estimated by many economists and analysts to be worth over 3 trillion US dollars?

A case in point: when was the last time you guys get a receipt for dinning at a restaurant or night club?

 

[Yizhi]

this is the study they refer to?

 

[AndrewJin]

What about China's enormous "underground economy" which is estimated by many economists and analysts to be worth over 3 trillion US dollars?

A case in point: when was the last time you guys get a receipt for dinning at a restaurant or night club?

Haha, I never ask, let them save some taxed receipts.
Underground economy in China is everywhere.

this is the study they refer to?

View attachment 260785


View attachment 260784

They know too much, not good for us.

 

[Yizhi]

They know too much, not good for us.

haha that's exact what i felt at first!

kind of creepy knowing others are studying Chinese internal issues so carefully.

 

[haviZsultan]

China has systematically underestimated those "virtual" GDP, it's a public secret, already fully discussed in our local economy forums. However, the statistics bureau of a county always publicise the true number of local GDP, but when it comes to provincial level, the number shrinks. When it comes to national level, the number is shrinking significantly.


Exactly. China has city with GDP per capita more than $30,000, also has city less than $5000.

View attachment 260556

View attachment 260555

So theres some pretty unequal wealth distribution. What part of China are you from and hows the local economy. Thanks in advance!

 

[AndrewJin]

So theres some pretty unequal wealth distribution. What part of China are you from and hows the local economy. Thanks in advance!

I'm from Central China, the province in the very centre of China called Hubei(means north to the lake)
The average GDP per capita of Hubei is just the same level as average of China（national $7500, provincial $7700).

Within the province, there are cities with GDP per capita reaching $15000(my city) and also mountainous prefecture with less than $4000. However, regional differences of living standards are not that big, since tax revenues will be redistributed based on population. If u travel to the most economically backward region in mountainous Hubei, the local public services are pretty much the same.

My city
Wuhan - Wikipedia, the free encyclopedia @haviZsultan
(major industrial hub in Central China, one of major education centres of China)

Some photos of my railway trip from my city to the mountainous regions in the province,
u can see how landscapes are gradually changing.
https://defence.pk/threads/chinese-hsr-news-and-information：original-translations.363685/page-24

Mountainous regions, lowest GDP per capita

@haviZsultan Central China($2 trillion) and Western China($2 trillion) are China's less developed regions but China's fastest growing places.
My province achieved top10 economic growth in H1 of 2015.
8.7% (1-6th month)