Economists in vain I suspect China in the overstatement of GDP growth. In fact the official data, on the contrary, underestimated, says one of the leading experts on the Chinese economy. According to conclusions of experts of the UN, this underestimation is approximately 3-4%.
In interview to the newspaper “Vedomosti” senior researcher of the Carnegie endowment for international peace and former Director for China at the world Bank, Huicong Huang refuted the widespread assumption that China overstates the GDP growth rate. According to the expert, in the Chinese system of counting really is inaccurate. But this fact leads to the lowering of indices, says the expert.
Juan linked the distrust of the Chinese system of counting with its opacity. “Data from local authorities, from the provinces were too high, and the amount they are supposed to give a figure that is much higher real GDP growth,” – said the expert. However, according to him, this does not affect the result of calculation: “But you have to understand that national GDP is not calculated just by adding up the data from the provinces. National Bureau of statistics of China generally doesn’t use them, it makes its own calculations of GDP based on various indicators.”
In fact, the offset in the calculation of GDP growth in China is occurring at the side of understating, not overstating, continued Juan. The expert attributed this to not yet completed in the country, “the transition from accounting in the socialist system of Central planning to an account, largely based on market principles and is consistent with the statistical principles of the United Nations”.
For this reason, in particular, the undervaluation of GDP occurs in the private sector and the services sector. “In a socialist system there is no private sector, and services are always undervalued, because Central planning is primarily associated with the production. And what now ensures the growth of the Chinese economy? In many respects the private sector and the services sector. Therefore, the growth and underestimated,” – said the expert.
Furthermore, Chinese GDP is very low compared with developed countries, the share of consumer spending, which is only 35%. The expert connects it with the accounting system of housing costs. “In the socialist housing system gives you state: you do not rent and do not own them, he has no value. In China today, when everyone seeks to become the owner of housing, the cost of it, estimated the cost of rent, should be counted in GDP. But they are generally not taken into account,” explained Juan. Thus, according to him, the cost of housing is undervalued by some 10% as a share of GDP.
The overall magnitude of the underestimation of China’s GDP can be understood according to the UN experts, which analyze the accuracy of Chinese statistics has been for about 25 years. According to their calculations, underreporting decreased in recent years is about 3-4%.
As noted by RBC, in the first quarter of 2017, China’s GDP amounted to 6.9% compared to the same period in 2016. The volume of industrial production increased by 7.6% (previous estimate was 6.3%); retail sales were up by 10.9%; the volume of investment in fixed assets, excluding rural households, increased by 9.2% and amounted to 1,362 trillion dollars.
The growth of China’s GDP in annual terms is reduced from 2010 (it was 10.4%). By 2015, the growth rate of the Chinese economy slowed down to 6.9%, to 2016-mu to 6.7%. According to the draft plan of socio-economic development of China, in 2017, the growth rate of GDP needs to be within 6.5%. Also the volume of steel production in China will decrease by 50 million metric tons of coal production by 150 million tonnes, a Decline is expected in the framework of the strategy to reduce excess production capacity in industries where supply exceeds demand.