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China ranks 6th in world economy(12/20/05)

 Related: Statistician: China remains world's largest developing country

          World Bank welcomes China's improved GDP data   

China on Tuesday revised its GDP(gross domestic product) figure for 2004 to 15.9878 trillion yuan(about 2 trillion U.S. dollars), up 2.3 trillion yuan, or 16.8 percent from the preliminary figures.
China's top statistician Li Deshui addresses the press conference at the Information Office of the State Council in Beijing, Dec. 20, 2005. (Photo: Xinhua)

China on Dec.20 revised its GDP (gross domestic product) for 2004 to 15.9878 trillion yuan (about 2 trillion U.S. dollars), up 2.3 trillion yuan, or 16.8 percent from the preliminary figures.

    The country's top statistician Li Deshui made the announcement at a press conference of the Information Office of the State Council, citing the result of a national economic survey.

    The country has overtaken Italy as the world's 6th biggest economy.

    The value-added of the tertiary industry was 6.5018 trillion yuan, 2.1297 trillion more than the annual preliminary estimation announced earlier this year. And the industry's share in the GDP rose from the earlier estimated 31.9 percent to 40.7 percent, an increase of 8.8 percentage points.

    The increase of service sector output accounted for the largest part, or 93 percent, of that of the GDP.

    Li said China had long been using the Material Product System (MPS) which was developed under the centrally-planned economic system in its national account statistics until the 1980s, resulting in "very weak" statistics for the service sector.

    The scope of tertiary industry is turning wide and complex with a large number of units, which have no good means for accounting and statistics, he said.

    Meanwhile, along with the economic reform, China has seen a diversified economic development in terms of ownership, and in particular, a dynamic development of private and individual-run service activities.

    "It is very difficult to conduct statistical surveys as they are very scattered with frequent changes, resulting in a certain degree of under-coverage," said Li.

    While many new services are mushrooming, data on their activities are often underestimated, he acknowledged.

    Li added that some of the services affiliated to manufacturing or construction enterprises are estimated but classified into the secondary industry, while more others are neglected.

    The value-added of the secondary industry was 7.3904 trillion yuan in 2004, 151.7 billion more than the original data, while the industry's share in the GDP shrank from the preliminarily estimated 52.9 percent to 46.2 percent, a drop of 6.7 percentage points.

    "Through the survey, we are able to remove the 'water' from the statistics of the manufacturing sector, in particular, from small-sized enterprises," Li said.

    Analysts say some small firms, including township enterprises in the rural areas, have been exaggerating their output figures to help local governments and officials showcase their "political achievements" and seek promotion.

    Li said the share of the primary industry was still based on the figure from the annual preliminary estimation, as the industry was not covered in the survey.

    The value-added of the primary industry was 2.0956 trillion yuan, and the industry's share in the GDP was 13.1 percent, 2.1 percentage points lower than the preliminary figures.

    Result from the latest survey will not affect the nation's macro-economic policy, Li said. "The changes in the figures do notmean the traditional statistics have misled China's policy-making."

    The survey's leading group was set up under the State Council, China's cabinet, and headed by Vice Premier Zeng Peiyan, with governments at all levels and concerned departments participating in the event.

    More than 3 million enumerators and supervisors were recruited,and another 10 million statistician and accountants from government agencies, enterprises and institutions were mobilized to participate in the survey, according to Li.

    More than 30 million questionnaires were collected in the survey with more than 1.06 billion records of firsthand raw data, Li said, adding that a sample survey showed that the comprehensive reporting error was only 4.9 per thousand, within the 1-percent target.

     Business confidentiality

    "In the publication, utilization and analysis of the survey results, departments and local governments concerned should continue to abide by the Statistics Law and the Regulations on National Economic Survey, to protect business confidentiality and privacy of the respondents, and to honor earnestly the commitmentsof not levying any penalties on the respondents on the basis of survey information," Li Deshui said at the press conference.

    The NBS is working on the revision of data back to 1993 on the basis of the revised GDP figures in the survey year, using the trend deviation method which is widely adopted by the Organizationfor Economic Cooperation and Development, Li said.

    "Results of the revision will be released on another occasion,"he said.

    According to the State Council's decision, the survey results will be used as a basis for the central government and for local governments in compiling 2005 national account statistics, in highlighting economic and social development for the 10th Five-year Plan period (2001-2005), and in preparing the 11th Five-year Development Program and the 2006 annual development plan, he said. 

    Tertiary industry

    The share of China's tertiary industry in the country's 2004 GDP (gross domestic product) has risen from the earlier estimated 31.9 percent to 40.7 percent, up 8.8 percentage points, shows the first-ever national economic survey.

    The results from the national economic survey indicate there was an underestimation of the tertiary industry's contribution to China's GDP in 2004, Li said.

    According to the survey, the value-added of the tertiary industry was 6.5018 trillion yuan, or 2.1297 trillion more than the annual preliminary estimation.

    Of the total increase of 2.3 trillion yuan in the GDP, the increase of the value-added of the tertiary industry accounted for 2.13 trillion, or 93 percent, said Li.

    Li said it is the under-coverage of the tertiary industry in the regular statistics that has led to the above situation.

    China had long been using the Material Product System (MPS) which was developed under the centrally-planned economic system inits national account statistics until the 1980s, resulting in very weak statistics for the service sector, said Li.

    As the scope of the tertiary industry is turning wide and complex with a large number of units, and many new and dynamic services are mushrooming in China along with the rapid economic growth, it is very difficult to conduct statistics surveys, resulting in a certain degree of under-coverage, Li added.

    Li mentioned the three sectors where private and individual ownership has taken a large share, including transport, storage, post and telecom; wholesale and retail trade, catering trade; and the real estate. The value-added in the three sectors was about 1.5 trillion yuan larger than the regular preliminary estimation, accounting for 70 percent of the total increase of the tertiary industry.

    In addition, some of the services affiliated to manufacturing or construction enterprises are estimated but classified into the second industry, while more others are neglected, said Li.

    Currently, the local governments in China are using a unified way to revalue their regional GDP according to the statistics of the national economic survey, said Li.

    Li said the new statistics from the national economic survey indicate the structure of the three industries is more consistent with the actual situation in China and more in line with the general level of developing countries.

    But he noted that although the revision leads to some increase in the total size of the GDP, the ranking of China's per capita GDP is still below 100th in the world.

    Exchange rate reform     

    While answering a question on whether China should step up the reform of its exchange regime, Li said China's exchange rate reform which began on July 21 is "successful," noting "This policy should not be changed so frequently." 

    "The reform of the exchange rate has been proved a successful one," he said.

    The floating exchange rate based on market supply and demand and pegged to a basket of currencies instead of a single currency in the past is a major progress of the reform in this regard, the Chinese official noted.

    China allowed its currency, the yuan, to appreciate by a modest 2 percent on July 21.

    The aim of the exchange rate reform is to build a managed, floating exchange rate mechanism based on market supply and demandand to maintain the yuan's basic stability at a reasonable equilibrium, said the People's Bank of China (PBoC), or the central bank.

 Survey result and macro-economic policy

    Li told the press conference results from the national economic survey will not affect the nation's macro-economic policy.

    The changes in the figures do not mean the traditional statistics have misled China's policy-making, he said, noting that the former figures did reflect the general level and development trend of China's economy, though they might have slightly undervalued the economic volume.

    In addition, Li said, the major problems of China's economy, including high energy consumption, low economic efficiency and the extensive mode of economic growth, did not change with the adjustment of statistical figures.

    Result of the survey also showed some optimistic implications. For example, it showed that the service industry has contributed greatly to China's economic growth, and consumption is also an important propeller of the economy, according to Li.

    "The structure of China's economic growth turned out to be morerational and healthy, which can give us confidence in a long-term rapid growth and will also help the nation in mapping out its macro-economic policy," he said.

 

 

 


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