China said Tuesday its economy is much bigger and less dependent on exports than previously reported, issuing new data that analysts said...
BEIJING — China said Tuesday its economy is much bigger and less dependent on exports than previously reported, issuing new data that analysts said make its roaring growth look easier to sustain and could encourage even more foreign investment.
A new survey boosted China’s official output for 2004 by 16.8 percent, taking into account emerging service businesses, the government said. It said services’ share of the economy rose sharply, while that of manufacturing fell.
The results show China’s mainland replacing Italy as the world’s sixth-largest economy, trailing Britain and France. China would jump to No. 4, behind only the United States, Japan and Germany, if it added in Hong Kong, which reports its economic figures separately.
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The figures mean China’s rates of exports and investment are smaller as a percentage of the total economy, possibly easing fears they were unsustainably high, analysts said.
“The Chinese economic miracle will look less like a miracle and more like a normal country,” said Steve Tsang, director of the Asian Studies Center at St. Antony’s College at Britain’s Oxford University.
“It would mean the economy’s ability to continue at the current rate of growth is better,” Tsang said.
The figures were released by the National Bureau of Statistics, which said it surveyed 30 million businesses, including restaurants, karaoke bars and others segments of the booming service industry.
The new data put China’s 2004 gross domestic product, the broadest measure of trade in goods and services, at nearly 16 trillion yuan ($2 trillion). That was up 2.3 trillion yuan ($285 billion) from numbers previously reported.
“Based on these figures, we can have even more confidence in our long-term fairly fast and sustained economic growth,” said Li Deshui, director of the statistics bureau.
Even more key could be the finding that Chinese consumers spend much more than previously thought, fueling growth and reducing reliance on exports, economists said.
Based on the new data, exports fell from 34 percent of the economy to 29 percent, cutting China’s “very high export dependency,” Jun Ma, chief economist for Greater China at Deutsche Bank, said in a research report.
Ma’s report said such evidence of strong consumer spending could encourage even more growth in services, creating new opportunities for foreign investors.
The government will be revising growth figures back to 1993, Li said.
That should not affect China’s policy on the politically sensitive exchange rate of its currency, Li said. China’s trading partners complain that the government-controlled exchange rate is too low, giving Chinese exporters an unfair price advantage.
Li emphasized that despite the upward revision in sheer economic size, China’s vast population of 1.3 billion means it still ranks below the top 100 countries in output per capita.
“We still have a long way to go to catch up with the developed countries,” he said.
Economists have long said China understated the size of its economy due to its failure to collect statistics accurately from small, private businesses, especially in services.
The key problem was a system that focused on manufacturing and relied on each company to have an employee who reports statistics, something that few private businesses do.
Other countries have reported large jumps in output when they switched economic measures, including a 17 percent increase for Indonesia in 2004, the World Bank said.
Li said Beijing will have to wait until it compiles figures for 2005 to determine its current economic rank.
“But undeniably they’re going to be the second-largest economy in the world in a few years,” said David Cohen of the consulting firm Action Economics in Singapore. “And then the question is, at what point do they surpass the U.S. in size?”