App | 中文 |

China’s GDP calculation reform hailed by experts

Updated: Aug 16,2016 2:50 PM’s Daily Overseas Edition

The National Bureau of Statistics (NBS) in July altered the way GDP data is calculated, recognizing that research and development (R&D) expenditures that can economically benefit companies are fixed capital formation.

The move has raised heated discussion at home and abroad. Ivo Havinga, chief of the Economic Statistics Branch of the United Nations Statistics Division, said the revision is a contribution not only to China, but also to the world.

Person in charge of the Statistical Department at the International Monetary Fund and World Development Indicators of World Bank also praised the reform as surprising progress and said it improved the comparability of data from China with data from other countries.

The adjustment was made according to the 2008 SNA (System of National Accounts), which was unveiled by five international organizations, including the United Nations, in 2009, regulating that R&D expenditures that yield economic benefits should be recorded as fixed capital formation, which is part of GDP.

Adopting this new standard, China will provide more reliable and comparable accounting data for the world’s economy, and it also guarantees a scientific, effective and transparent Chinese economy, said Hu Angang, director of the Center for China Studies at Tsinghua University.

The adjustment was made to bring China’s GDP figure more in line with those of other countries and boost innovation, and it has little effect on the growth speed of GDP, said NBS spokesman Sheng Laiyun, adding that R&D’s contribution to the economy indeed is increasing in recent years, while the new calculation’s effect on the GDP’s annual growth is slight, about 0.06 percent on average in the past 10 years.

Data adjustment has little influence on growth rates and it is a technical measure, said Song Xuguang, a statistics expert from Beijing Normal University.

One of the reasons for low investment by local governments in R&D is that it was not involved in the GDP accounting system, and the new calculation method is sure to increase R&D investment by local governments, said Xu Jing, director general of the Department of Innovation and Development at the Ministry of Science and Technology.

He added that the new accounting method is in line with China’s science and technology innovation development, and can help spur an increase in R&D investment.