Vol. 5 Num 558 Wed. December 21, 2005  

China's GDP revision both blessing and curse
Beijing upgrades 2004 GDP growth to 16.8pc

A jump of nearly 300 billion dollars in the worth of China's economy confirmed long-held suspicions that Beijing's statistics were wildly inaccurate as analysts warned Tuesday the change was both a blessing and a curse.

Official data released Tuesday showed that China's economy total gross domestic product (GDP) in 2004 had been unreported by 284 billion dollars or 16.8 percent, making it worth 15,987.8 billion yuan (1.98 trillion dollars).

The new valuation places China just behind France and the UK on the list of world's largest economies, although given the expected pace of growth in 2005, it is probably bigger still.

"It could be number four it could be number five but it's almost the same as the UK's economic size," said Chen Xingdong, an economist at BNP Paribas in Beijing.

"For sure by 2006 China will become number four and by 2010 it will be more than Germany," Chen said.

The adjustment came as no surprise to economists who for years have held that Beijing's statistics were incorrect and that the economy was expanding at a much faster pace than the official average rates of nine percent of the last decade.

National Bureau of Statistics director Li Deshui hoped that the yearlong census effort might once and for all do away with poor Chinese statistic taking, a problem the ruling Communist Party has long struggled with.

"To get rid of the (bad statistics) was equal to negating what we had achieved politically, this left a huge hindrance and was very difficult in terms of the future," Li said.

"Now this time, (this new census) we have cut off the past (way of doing things), we have got rid of the millstone and we are moving forwards," Li said.

One immediate consequence of the survey would be to make China appear a more "reasonable", "healthy" and "ordinary" economy by reducing its investment-to-GDP ratio and raising the consumption-to-GDP ratio to levels that are closer to those of other East Asian countries.