[Paleopsych] Economist: China: Catching up

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Tue Jan 10 14:18:21 UTC 2006

China: Catching up

    Dec 20th 2005 | BEIJING

    China's economy is overtaking Britain's

    "SURPASS Britain and catch up with America": Mao Zedong's slogan is
    still widely remembered in China. Though his reckless idealism is now
    officially discredited, there has been satisfaction this week at the
    results of a reassessment of the country's GDP data. China's economy,
    the new figures show, is on the verge of overtaking Britain's.

    The revision of China's GDP figures was of an order reminiscent of
    Mao's liberal adjustment of statistics to show his campaign was on
    target. Now, however, it is the higher figure that is the more
    credible one. Economists have long believed that China's GDP has been
    considerably understated thanks mainly to poor measuring of privately
    run services. The country's first economic census, launched in
    January, showed that in 2004 it was some 16.8% bigger than the
    previously announced figure of 13.7 trillion yuan ($1.7 trillion).

    In dollar terms at official exchange rates, this means that China
    replaced Italy as the world's sixth-biggest economy last year. In
    2005, it almost certainly surpassed France, and probably squeaked past
    Britain too. It adds some $284 billion to China's GDP for last year, a
    figure almost the size of Taiwan's total.

    The survey also confirms some long-held suspicions about China's
    economic make-up: that its service sector is bigger than the one-third
    of GDP suggested by the old figures (the new data show more than 40%),
    that consumption is also higher and that investment and savings as a
    proportion of GDP are lower. This lot of figures look more sustainable
    than the old lot. But they are still only a best guess at the truth.
    And, at a sixth the size of America's, China's economy still has a bit
    of catching-up to do.

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