China's NBS updates GDP calculation methods

BOFIT Viikkokatsaus / BOFIT Weekly Review 2016/27

Under the new method of GDP reckoning, corporate spending on research & development activities is treated as gross fixed capital formation rather than consumption. Following the change, China’s gross domestic product is about one per cent larger than earlier stated. The NBS said that the impact on GDP growth is marginal. Last year’s growth figure remained at 6.9 %, and 1Q16 annual growth at 6.7 %. The NBS this week announced the change and published revised annual GDP figures going back to 1952. Following the change, 2015 GDP increased from 67.671 trillion yuan to 68.551 trillion yuan. The change also slightly reduced the share of domestic consumption in the economy. At this stage, the new accounting method applies only to national, not regional, GDP figures.

Under the revised system, R&D activity is recorded following the newer international SNA 2008 standard. China’s national GDP accounting is not fully compliant with many of the newer standards. It is estimated that it still e.g. underestimates the contribution of services to the economy. The NBS recently said it was looking at ways to improve national accounting to better incorporate “new economy” branches such as biotechnology, online retail and robotics.

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