China's nominal GDP will hit $15 TRILLION in 2018

[AndrewJin]

Listen dude, don't make an utter fool of yourself just because you dont read Chinese

Here it is from the horse's mouth:

http://www.stats.gov.cn/tjgz/tzgb/201708/t20170823_1527059.html

Check it out!

Yes, it was encouraged to use the new one (adapted from SNA2008) since 2017z

But until now only a small number of cities have used. Most jurisdictions have not used, especially on the province level.

china took only R&D into GDP calculation, and added 1.3% GDP by doing that. under sna2008, China still miss the biggest part: house rent calculation. in old way (sna1993), house value is listed by its construction cost, in sna 2008, however, it is listed by its real market value, u see the huge boost in the GDP calculation considering china's soaring property market in the past decades. usually sna 2008 will give u 5～6% gdp boost for normal countries, china is not there yet. but i doubt they will do it in the near future

Not need to directly use SNA 2008.
The newly adapted Chinese 2016 version is way more sensible.

 

[cirr]

Yes, it was encouraged to use the new one (adapted from SNA2008) since 2017z

But until now only a small number of cities have used. Most jurisdictions have not used, especially on the province level.

And there is the-called grey or underground economy.

We all know that in China one can spend a huge sum of money on goods and services without a receipt/invoice, making it near impossible for Inland Revenue to trace the expenditure inccured.

Some economists estimate that the size of the "undeground GDP" is as large as 2-3 trillion USD.

 

[AndrewJin]

And there is the-called grey or underground economy.

We all know that in China one can spend a huge sum of money on goods and services without a receipt/invoice, making it near impossible for Inland Revenue to trace the expenditure inccured.

Some economists estimate that the size of the "undeground GDP" is as large as 2-3 trillion USD.

Easily as big as SP2012 economy.

 

[Beast]

Well，I have said before，I strongly believe if not yuan is undervalued or dollar is overvalued right now，china could have an already larger GDP than USA

It will changed soon as China seek a service and upscale high value economy. Undervalue money will not be attractive as RMB seek to be internationalized. RMB up 10% and USD dropped 10% for year 2018. And you can see the effect.

 

[Lil Mathew]

Yes, it was encouraged to use the new one (adapted from SNA2008) since 2017z

But until now only a small number of cities have used. Most jurisdictions have not used, especially on the province level.


Not need to directly use SNA 2008.
The newly adapted Chinese 2016 version is way more sensible.

You comprehended it wrongly... Read that once more... The following is the two paragraphs in that page...

　　Since the implementation of China's National Economic Accounting System ( 2002 ) for more than a decade, with the development of the socialist market economy in our country, many new situations and changes have taken place in our economic life. Macroeconomic management and the public have had an impact on the national accounts Many new demands, so we need to revise our current system of national accounts so that they can adapt to the new situation and new demand of economic development. 2009 , the United Nations and other international organizations issued five new international standards for national accounts - "System of National Accounts 2008 " (hereinafter referred to as 2008 Nian the SNA ). Currently, most developed countries and some developing countries have begun to implement 2008 Nian the SNA . The system of national accounts of our country also needs to be revised accordingly so as to link it with the new international standards and enhance its international comparability.
　　In 2016 , the accounting system enriched and perfected the accounting content, introduced new concepts, expanded the scope of accounting, refined the basic classification, revised the basic accounting indicators and improved the basic accounting methods, which are significant to the current national economic accounting system in our country reform. The implementation of the new accounting system is conducive to more comprehensively and accurately reflecting the operation of our national economy, better reflecting the new features of China's economic development, and improving the international comparability of national accounts in our country. It is also conducive to raising the level of macroeconomic policy-making and macro-management.

For more reference...
China revises GDP calculation method
BEIJING, July 5 (Xinhua) -- China's National Bureau of Statistics (NBS) has adopted a new method of calculating GDP that it says "better reflects the contribution of innovation to economic growth."

Research and development (R&D) expenditures that can economically benefit companies will no longer be calculated as intermediate consumption, but as fixed capital formation, the NBS said in a statement.

The adjustment was made according to the 2008 SNA (System of National Accounts), which was unveiled by five international organizations, including the United Nations, in 2009 to provide a "comprehensive, consistent and flexible set of macroeconomic accounts."

The NBS will use the method for future GDP calculations, and has also recalculated all figures dating back to 1952.

GDP for the previous six decades all rose due to the reform. In the past decade, the average annual increase in GDP volume due to the adjustment was 1.06 percent.

Recorded GDP growth rates in the past 10 years rose by an annual average of 0.06 percentage point. The growth rate for 2015 remained at 6.9 percent, revised upward by 0.04 percentage point.

The reform can "better reflect the contribution of innovation to economic growth," the statement said.

In recent years, China has promoted science, technology and creative development, with rapid growth in R&D expenditures and an increasingly important role for R&D to economic growth.

However, the old calculation method failed to reflect the importance of R&D, as intermediate consumption only measures value of goods and services that are transformed or entirely used up in the course of production.

In reality, R&D expenditures that yield economic benefit should not be considered "completely used up in the accounting period," and thus should be recorded as fixed capital formation, according to the 2008 SNA.

At present, most member countries of the Organization for Economic Cooperation and Development (OECD) and some developing countries use the 2008 SNA framework to calculate R&D expenditures.

For the world's second largest economy, reforming the GDP calculation method according to the same framework will bring China's GDP figures more in line with those of other countries, the NBS said.

http://www.xinhuanet.com/english/2016-07/05/c_135490673.htm

 

[cirr]

You comprehended it wrongly... Read that once more... The following is the two paragraphs in that page...

　　Since the implementation of China's National Economic Accounting System ( 2002 ) for more than a decade, with the development of the socialist market economy in our country, many new situations and changes have taken place in our economic life. Macroeconomic management and the public have had an impact on the national accounts Many new demands, so we need to revise our current system of national accounts so that they can adapt to the new situation and new demand of economic development. 2009 , the United Nations and other international organizations issued five new international standards for national accounts - "System of National Accounts 2008 " (hereinafter referred to as 2008 Nian the SNA ). Currently, most developed countries and some developing countries have begun to implement 2008 Nian the SNA . The system of national accounts of our country also needs to be revised accordingly so as to link it with the new international standards and enhance its international comparability.
　　In 2016 , the accounting system enriched and perfected the accounting content, introduced new concepts, expanded the scope of accounting, refined the basic classification, revised the basic accounting indicators and improved the basic accounting methods, which are significant to the current national economic accounting system in our country reform. The implementation of the new accounting system is conducive to more comprehensively and accurately reflecting the operation of our national economy, better reflecting the new features of China's economic development, and improving the international comparability of national accounts in our country. It is also conducive to raising the level of macroeconomic policy-making and macro-management.

For more reference...
China revises GDP calculation method
BEIJING, July 5 (Xinhua) -- China's National Bureau of Statistics (NBS) has adopted a new method of calculating GDP that it says "better reflects the contribution of innovation to economic growth."

Research and development (R&D) expenditures that can economically benefit companies will no longer be calculated as intermediate consumption, but as fixed capital formation, the NBS said in a statement.

The adjustment was made according to the 2008 SNA (System of National Accounts), which was unveiled by five international organizations, including the United Nations, in 2009 to provide a "comprehensive, consistent and flexible set of macroeconomic accounts."

The NBS will use the method for future GDP calculations, and has also recalculated all figures dating back to 1952.

GDP for the previous six decades all rose due to the reform. In the past decade, the average annual increase in GDP volume due to the adjustment was 1.06 percent.

Recorded GDP growth rates in the past 10 years rose by an annual average of 0.06 percentage point. The growth rate for 2015 remained at 6.9 percent, revised upward by 0.04 percentage point.

The reform can "better reflect the contribution of innovation to economic growth," the statement said.

In recent years, China has promoted science, technology and creative development, with rapid growth in R&D expenditures and an increasingly important role for R&D to economic growth.

However, the old calculation method failed to reflect the importance of R&D, as intermediate consumption only measures value of goods and services that are transformed or entirely used up in the course of production.

In reality, R&D expenditures that yield economic benefit should not be considered "completely used up in the accounting period," and thus should be recorded as fixed capital formation, according to the 2008 SNA.

At present, most member countries of the Organization for Economic Cooperation and Development (OECD) and some developing countries use the 2008 SNA framework to calculate R&D expenditures.

For the world's second largest economy, reforming the GDP calculation method according to the same framework will bring China's GDP figures more in line with those of other countries, the NBS said.

http://www.xinhuanet.com/english/2016-07/05/c_135490673.htm

Read post #28

The Guidelines for adopting SNA2008 was approved by the State Council and promulgated by the State Statistical Bureau on July 13, 2017.

 

[Lil Mathew]

Read post #28

The Guidelines for adopting SNA2008 was approved by the State Council and promulgated by the State Statistical Bureau on July 13, 2017.

That was just a circular to the local governments and other institutions to comply with the new system... Read the below paragraph from that circular...
　　In order to strengthen and improve macroeconomic regulation and control, meet the new needs of macroeconomic management and social publics in the new normalcy of the economy, and achieve convergence with the new international standards for national accounts, according to the Third Plenary Session of the 18th CPC Central Committee to Accelerate the Establishment of National Reunification As required by the economic accounting system, China conducted a comprehensive and systematic revision of China's national economic accounting system. According to the "Reply of the State Council on the System of National Accounts of China ( 2016 )" (Guo Han [ 2017 ] No. 91 ), the "China National Accounts System ( 2016 )" (hereinafter referred to as the 2016 Accounting System) Please conscientiously implement.

The national beuro of statistics already implemented this... For reference...

http://m.chinadaily.com.cn/en/2016-07/07/content_26000072.htm

BEIJING - China's statistics authority altered the way quarterly GDP data are calculated, a move analysts have called a step toward meeting international standards and improving accuracy.

Research and development (R&D) expenditures that can economically benefit companies will no longer be calculated as intermediate consumption, but as fixed capital formation, the National Bureau of Statistics (NBS) announced on Tuesday.

That will add $131 billion to last year's GDP figure, the NBS said.

Cheng Zilin, head of the NBS's Department of National Accounts, said the revision better reflects the contribution of innovation to economic growth.

In recent years, China has promoted science, technology and creative development, with rapid growth in R&D expenditures and an increasingly important role for R&D in economic growth.

However, the old calculation method failed to reflect the importance of R&D, as intermediate consumption only measures value of goods and services that are transformed or entirely used up in the course of production.

According to the System of National Accounts 2008 (SNA 2008), an international standard for measuring a country's economic activity, R&D expenditures that yield economic benefit should not be considered "completely used up in the accounting period," and thus should be recorded as fixed capital formation, which is part of GDP.

This methodology, introduced in 2009, has been adopted by most member countries of the Organization for Economic Cooperation and Development (OECD), including the United States, Canada and Australia.

"We have been pushing this reform since 2009," Cheng Zilin said, adding that now is the right time to do it.

"There is need for China, the world's second largest economy, to adopt this new standard and improve the international comparability of its accounting data," he added.

The NBS has also released re-calculated GDP figures from 1952 through the first quarter of 2016. After revision, last year's GDP increased by 879.8 billion yuan.

Cheng explained that the increase was due to continuous growth in R&D spending and the accumulation of R&D investment stock.

After the revisions, China's GDP value increased, while real growth did not change much, according to Liu Liu, an analyst with the China International Capital Corporation, a Beijing-based investment bank.

Under the new mechanism, GDP in 2015 was revised upward by 1.3 percent, while the year-to-year growth rate was barely changed at 6.9 percent.

 

[F-22Raptor]

Listen dude, don't make an utter fool of yourself just because you dont read Chinese

Here it is from the horse's mouth:

http://www.stats.gov.cn/tjgz/tzgb/201708/t20170823_1527059.html

Check it out!

PS Leaving out exorbitant legal fees, wanton healthcare expenses, questionable owner-occupier housing expenditure, greedy stock options, revenues from trades such as prostitution drugs and betting, etc etc etc....your adopted country's GDP is ...

Whether I read Chinese or not is irrelevant.

4.4 Comparability of Data

China's System of National Accounts (2016) adopted the basic accounting principles, contents and methods of the United Nation's System of National Accounts (SNA) 2008，therefore the GDP data are internationally comparable.

Straight from the CCP! We're still waiting on that fake $1 trillion.

 

[zeronet]

There will be a big delay between approval of a new system and final data announcement. It is easy to include the R&D cost into calculation, since the data is already there on the table, but data collection on property market value is a huge job. The process of new system adoption will take some years to finish.

 

[AndrewJin]

You comprehended it wrongly... Read that once more... The following is the two paragraphs in that page...

　　Since the implementation of China's National Economic Accounting System ( 2002 ) for more than a decade, with the development of the socialist market economy in our country, many new situations and changes have taken place in our economic life. Macroeconomic management and the public have had an impact on the national accounts Many new demands, so we need to revise our current system of national accounts so that they can adapt to the new situation and new demand of economic development. 2009 , the United Nations and other international organizations issued five new international standards for national accounts - "System of National Accounts 2008 " (hereinafter referred to as 2008 Nian the SNA ). Currently, most developed countries and some developing countries have begun to implement 2008 Nian the SNA . The system of national accounts of our country also needs to be revised accordingly so as to link it with the new international standards and enhance its international comparability.
　　In 2016 , the accounting system enriched and perfected the accounting content, introduced new concepts, expanded the scope of accounting, refined the basic classification, revised the basic accounting indicators and improved the basic accounting methods, which are significant to the current national economic accounting system in our country reform. The implementation of the new accounting system is conducive to more comprehensively and accurately reflecting the operation of our national economy, better reflecting the new features of China's economic development, and improving the international comparability of national accounts in our country. It is also conducive to raising the level of macroeconomic policy-making and macro-management.

For more reference...
China revises GDP calculation method
BEIJING, July 5 (Xinhua) -- China's National Bureau of Statistics (NBS) has adopted a new method of calculating GDP that it says "better reflects the contribution of innovation to economic growth."

Research and development (R&D) expenditures that can economically benefit companies will no longer be calculated as intermediate consumption, but as fixed capital formation, the NBS said in a statement.

The adjustment was made according to the 2008 SNA (System of National Accounts), which was unveiled by five international organizations, including the United Nations, in 2009 to provide a "comprehensive, consistent and flexible set of macroeconomic accounts."

The NBS will use the method for future GDP calculations, and has also recalculated all figures dating back to 1952.

GDP for the previous six decades all rose due to the reform. In the past decade, the average annual increase in GDP volume due to the adjustment was 1.06 percent.

Recorded GDP growth rates in the past 10 years rose by an annual average of 0.06 percentage point. The growth rate for 2015 remained at 6.9 percent, revised upward by 0.04 percentage point.

The reform can "better reflect the contribution of innovation to economic growth," the statement said.

In recent years, China has promoted science, technology and creative development, with rapid growth in R&D expenditures and an increasingly important role for R&D to economic growth.

However, the old calculation method failed to reflect the importance of R&D, as intermediate consumption only measures value of goods and services that are transformed or entirely used up in the course of production.

In reality, R&D expenditures that yield economic benefit should not be considered "completely used up in the accounting period," and thus should be recorded as fixed capital formation, according to the 2008 SNA.

At present, most member countries of the Organization for Economic Cooperation and Development (OECD) and some developing countries use the 2008 SNA framework to calculate R&D expenditures.

For the world's second largest economy, reforming the GDP calculation method according to the same framework will bring China's GDP figures more in line with those of other countries, the NBS said.

http://www.xinhuanet.com/english/2016-07/05/c_135490673.htm

Pls refer to Chinese source thanks, see links post by Cirr

There will be a big delay between approval of a new system and final data announcement. It is easy to include the R&D cost into calculation, since the data is already there on the table, but data collection on property market value is a huge job. The process of new system adoption will take some years to finish.

You are right, only R&D has been included so far. And many jurisdictions have not yet switched to the new one.
And the new one is NOT sna2008.

 

[Adam WANG SHANGHAI MEGA]

Still behind US but very promising for sure!

 

[zeronet]

That was just a circular to the local governments and other institutions to comply with the new system... Read the below paragraph from that circular...
　　

The national beuro of statistics already implemented this... For reference...

http://m.chinadaily.com.cn/en/2016-07/07/content_26000072.htm

BEIJING - China's statistics authority altered the way quarterly GDP data are calculated, a move analysts have called a step toward meeting international standards and improving accuracy.

Research and development (R&D) expenditures that can economically benefit companies will no longer be calculated as intermediate consumption, but as fixed capital formation, the National Bureau of Statistics (NBS) announced on Tuesday.

That will add $131 billion to last year's GDP figure, the NBS said.

Cheng Zilin, head of the NBS's Department of National Accounts, said the revision better reflects the contribution of innovation to economic growth.

In recent years, China has promoted science, technology and creative development, with rapid growth in R&D expenditures and an increasingly important role for R&D in economic growth.

However, the old calculation method failed to reflect the importance of R&D, as intermediate consumption only measures value of goods and services that are transformed or entirely used up in the course of production.

According to the System of National Accounts 2008 (SNA 2008), an international standard for measuring a country's economic activity, R&D expenditures that yield economic benefit should not be considered "completely used up in the accounting period," and thus should be recorded as fixed capital formation, which is part of GDP.

This methodology, introduced in 2009, has been adopted by most member countries of the Organization for Economic Cooperation and Development (OECD), including the United States, Canada and Australia.

"We have been pushing this reform since 2009," Cheng Zilin said, adding that now is the right time to do it.

"There is need for China, the world's second largest economy, to adopt this new standard and improve the international comparability of its accounting data," he added.

The NBS has also released re-calculated GDP figures from 1952 through the first quarter of 2016. After revision, last year's GDP increased by 879.8 billion yuan.

Cheng explained that the increase was due to continuous growth in R&D spending and the accumulation of R&D investment stock.

After the revisions, China's GDP value increased, while real growth did not change much, according to Liu Liu, an analyst with the China International Capital Corporation, a Beijing-based investment bank.

Under the new mechanism, GDP in 2015 was revised upward by 1.3 percent, while the year-to-year growth rate was barely changed at 6.9 percent.

Apparently you did not read or understand the text you referred. Look at the red text,
Notes:
1) last year GDP added only 879.8 billion yuan by figure revision, or USD$130 billion, only 1.3% GDP;
2) ".....the increase was due to continuous growth in R&D spending and the accumulation of R&D investment stock." So, as I said, only R&D is included into the new data. In another words, it is still not a complete SNA 2008 system

 

[Lil Mathew]

Apparently you did not read or understand the text you referred. Look at the red text,
Notes:
1) last year GDP added only 879.8 billion yuan by figure revision, or USD$130 billion, only 1.3% GDP;
2) ".....the increase was due to continuous growth in R&D spending and the accumulation of R&D investment stock." So, as I said, only R&D is included into the new data. In another words, it is still not a complete SNA 2008 system

That is the main change in GDP calculation occurs when you apply SNA 2008 standard...

System of National Accounts 2008 (SNA08) - Main Changes
The changes in the international standards which have the most significant impact on the level of GDP relate to the delineation of investments.

According to SNA 2008, expenditures on research and development and weapons systems (warships, submarines, military aircraft, tanks, etc.) are now included in gross fixed capital formation, i.e. investments. This is recognition of the fact that expenditures on these items provide long-lasting services to businesses, non-profit institutions, and the governments who use them. It increases the level of GDP across time, but the impact on GDP growth rates will generally be minor (as can be seen in countries who have already implemented SNA 2008).

Moreover, in situations like this when changes in international standards are actually implemented in the national accounts, countries tend to take advantage of the unique situation and make changes to improve all their compilation methods - therefore also implementing various improvements in sources and estimation methodologies. It is important to underline that the impact of the latter “statistical benchmark revision” could be higher than the impact of the changeover in standards. For example, the Netherlands increased their level of GDP by 7.6 % for 2010, but only 3 percentage points are related to the implementation of the SNA 2008.

http://www.oecd.org/std/na/sna-2008-main-changes.htm

 

[zeronet]

That is the main change in GDP calculation occurs when you apply SNA 2008 standard...

System of National Accounts 2008 (SNA08) - Main Changes
The changes in the international standards which have the most significant impact on the level of GDP relate to the delineation of investments.

According to SNA 2008, expenditures on research and development and weapons systems (warships, submarines, military aircraft, tanks, etc.) are now included in gross fixed capital formation, i.e. investments. This is recognition of the fact that expenditures on these items provide long-lasting services to businesses, non-profit institutions, and the governments who use them. It increases the level of GDP across time, but the impact on GDP growth rates will generally be minor (as can be seen in countries who have already implemented SNA 2008).

Moreover, in situations like this when changes in international standards are actually implemented in the national accounts, countries tend to take advantage of the unique situation and make changes to improve all their compilation methods - therefore also implementing various improvements in sources and estimation methodologies. It is important to underline that the impact of the latter “statistical benchmark revision” could be higher than the impact of the changeover in standards. For example, the Netherlands increased their level of GDP by 7.6 % for 2010, but only 3 percentage points are related to the implementation of the SNA 2008.

http://www.oecd.org/std/na/sna-2008-main-changes.htm

Yes, each country has its own situation, but 1.3% for China is way too little, almost on the bottom of all the countries on GDP recalculations. Maybe China just put this data as it is and no more adjustment, who knows, and you happy, that "F-22" guy happy.......

 

[AndrewJin]

Apparently you did not read or understand the text you referred. Look at the red text,
Notes:
1) last year GDP added only 879.8 billion yuan by figure revision, or USD$130 billion, only 1.3% GDP;
2) ".....the increase was due to continuous growth in R&D spending and the accumulation of R&D investment stock." So, as I said, only R&D is included into the new data. In another words, it is still not a complete SNA 2008 system

Yes, only R&D