BOFIT Viikkokatsaus / BOFIT Weekly Review 2015/01
The GDP adjustment reflects the rapidly expanding service sector for which compiling reliable statistics has been a challenge. Service sector output was revised up about 5 % and industrial sector output was increased by about 3 %. Data from the earlier economic censuses caused the NBS to revise its GDP estimate up by 17 % in 2004 and 4.4 % in 2008. In both instances, the largest contributor to GDP gains came from adjustments in service sector figures.
The economic census provides extensive information on trends in Chinese corporations and shifts in economic focus. The number of private firms rose by 56 % between 2008 and 2013, while the number of state-owned enterprises declined. Some 96 % of the private sector is made up of micro and small companies. The relative importance of the service sector has grown steadily, accounting for 47 % of GDP in 2013 and exceeding the contribution of the industrial sector for the first time ever (44 %).
The census findings assist decision-makers in evaluation of the reliability of national accounts and provide guidance in assessing and dimensioning economic policies. NBS officials, however, have yet to implement the UN’s System of National Accounts (SNA) as laid out in the most recent 2008 version. China’s figures are based on the 1993 version, which e.g. treats R&D as a cost rather than an investment. If NBS officials were to adopt the latest SNA version, further upward adjustments to GDP would be inevitable.
In 2013, China became the world’s second largest economy after the US. In terms of purchasing-power-adjusted GDP, China now nearly matches the US. In terms of GDP per capita, of course, China is still a lower middle-income country, and income distribution is still very uneven. Revisions to GDP made now and possibly later do not alter the overall fact that the Chinese economy is slowing. Further, the NBS notes its adjustment of 2013 GDP has no impact on 2014 growth figures.