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China adjusts method of calculating GDP

Xin Zhiming/Wang Yanfei
Updated: Jul 6,2016 7:06 AM     China Daily

China has changed its method of calculating the country’s GDP, a move that is in line with international standards and is not an attempt to jazz up growth figures, the National Bureau of Statistics said on July 5.

Research and development expenditure, which can bring continuous economic benefits to enterprises and was formerly excluded from GDP calculation, will now be taken into account.

The change comes as China adopts the general methodology used by major developed countries for compiling measures of economic activity, the NBS said on its website.

China’s R&D spending has been growing rapidly in recent years, soaring from 0.57 percent of GDP in 1996 to 2.08 percent in 2014. The new method “better reflects the contribution of innovation to (China’s) economic growth”, the NBS said.

After the adjustment, China’s total scale of GDP each year since 1952 has been expanded, but the effect on its annual growth is slight by 0.06 percent on average in the past 10 years, according to the NBS.

China’s GDP growth last year remains at 6.9 percent despite being revised upward by 0.04 of a percentage point. Growth in the first quarter of this year has also been raised by 0.04 of a percentage point, although its total scale is expanded by 1.3 percent.

“Such a change in methodology should not be over-interpreted,” said Gao Yuwei, a researcher with the Institute of International Finance, a think tank of the Bank of China. China used to be a planned economy and now is moving toward a more modern way of statistical calculation, an adjustment that is normal and has only a minimal effect on real growth figures, Gao said.

After the UN adjusted its accounting method, the System of National Accounts, in 2009, some developed countries, including the United States, Canada and Australia, and some developing countries changed their way of calculating GDP. As the world’s second-largest economy, China has followed suit to make its numbers more comparable, the NBS said.

The move is part of the country’s agenda to improve its statistical calculation and is not being undertaken to beautify the current economic growth figures, the bureau said.

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