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China GDP 2004

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

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.

China on Tuesday 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 increase of service sector output accounted for the largestpart, 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 witha 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 theindustry'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 thestatistics 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 tohelp 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 industrywas 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 comprehensivereporting error was only 4.9 per thousand, within the 1-percent target.

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.

Li Deshui, head of China's National Bureau of Statistics, told a press conference in Beijing on Tuesday that results from the national economic survey indicate there was an underestimation of the tertiary industry's contribution to China's GDP in 2004.

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.

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.

 

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