Let's answer some myths.
China consumption is very low
That is not true at all
China uses income method for calculating secondary and tertiary sector but use production method to calculate primary sector. China also don't care for English publication& create wrong perception
China consumption is very low
That is not true at all
China uses income method for calculating secondary and tertiary sector but use production method to calculate primary sector. China also don't care for English publication& create wrong perception
Any country following SNA uses expenditure method as benchmark.
In theory all three value must be same. But in reality it differs hence discrepancy is added to gdp figure to match all methods.
In theory all three value must be same. But in reality it differs hence discrepancy is added to gdp figure to match all methods.
However china don't calculate expenditure method from ground up.
They impute consumption from surveys + (gov spending and net export) and subtract this from production-income based GDP number to arrive at investment value. This creates illusion that investment is 60% of gdp.
They impute consumption from surveys + (gov spending and net export) and subtract this from production-income based GDP number to arrive at investment value. This creates illusion that investment is 60% of gdp.
History of national accounting, if interested
Though china do calculate one thing that is more through and through. Its retail sales.
What is china's retail sale to reported gdp ratio and how it compare with other trade deficit and trade surplus countries.
India numbers include catering services+ fast food.
Before 2010, publicly available India retail data is for alternate year.
India numbers include catering services+ fast food.
Before 2010, publicly available India retail data is for alternate year.
Then why do computed consumption in expenditure so low.
China calculate gov provided amenities, subsidies amenities and companies amenities to citizen and workers not as consumption.
China calculate gov provided amenities, subsidies amenities and companies amenities to citizen and workers not as consumption.
China impute rent by heavily discounting it.
China don't have gst like things, so much of the small enterprise sale use false receipt to steal taxes. And since they are below threshold level not much happen.
Another problem is imputation non reestate values using extrapolation and sampling.
These all thing heavily discount consumption.
For example just increasing rent yield would give much higher consumption
For example just increasing rent yield would give much higher consumption
According to Morgan Stanley, china gdp was 25% under counted at exchange rate in 2013
In 2014, USA moved to SNA2008 and they revised data from 2008 onwards and their gdp increases by 560bn+
China did wanted to move to SNA 2008 too, but extra scrutiny from developed world made them having second through and its already 7 yrs since when they wanted to move to new accounting system but yet to do it.
China services sector is another under counted number so much. Mainly because of sampling error and intended from gov side since still carry ideological weight age
What ideological baggage read
Though china is serious about getting right direction of gdp hence moved to SNA but not enough to nail it to T.
They want to see real direction because of past incident.
Where accountant gave wrong data which lead to faminines killing millions
They want to see real direction because of past incident.
Where accountant gave wrong data which lead to faminines killing millions
All in all if china do count using how India and america count GDP, china market rate GDP would be at least 30% bigger then reported.
@joan_poh @kimlongkl1 @Doggy_Dog1208 One more thread is needed. About provincial gdp and national gdp mismatch.
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