China’s GDP Revision Adds Output Equal to Malaysian Economy

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China's Economic Census
A photographer helps a customer wear a traditional Chinese rental costume at a photo shop in Beijing, China. The economic census is conducted about every five years to gather information on the manufacturing and services industries. Photographer: Tomohiro Ohsumi/Bloomberg

China revised the size of the economy by $308.8 billion, adding almost the entire output of Malaysia.

The gross domestic product of the world’s second-largest economy was 58.8 trillion yuan in 2013, according to the results of a nationwide economic census announced today. That’s 3.4 percent larger than the previously reported figure. Malaysia’s 2013 GDP was $312 billion.

The size of the revision was smaller than the last time China made a similar change in 2008, reflecting more accurate counting of a rapidly expanding services industry. The larger GDP makes China’s debt look smaller by comparison, which may give policy makers more room to maneuver as they seek ways to bolster growth set to be the lowest since 1990 this year.

“Investors should be looking at broader indicators than just GDP,” said Pauline Loong, managing director at Asia-analytica Research Pte in Hong Kong. “Chinese economic growth will continue on its downward trend in 2015, whatever the revisions.”

The revision will barely affect the 2014 GDP growth rate, the National Bureau of Statistics said in a statement today. Tertiary industry’s share of GDP is revised to 46.9 percent from 46.1 percent, it said, reflecting a more active services sector.

More Balanced

“The economic structure is shown more balanced after the census,” analysts at China International Capital Corp. including chief China economist Liang Hong, said in a report today. They said consumption would be higher and the growth rate in the past five years will probably be revised up.

The economic census is conducted about every five years to gather information on the manufacturing and services industries. Over 10 million businesses and about 60 million enterprises were visited early this year by about 3 million census takers, according to the official Xinhua News Agency.

The past two censuses led to a 16.8 percent boost to 2004 GDP and a 4.4 percent increase in 2008. Ma Jiantang, the head of the National Bureau of Statistics, said Dec. 16 that China would revise 2013 GDP upward by “a bit more than 3 percent.”

A Bloomberg survey of 12 economists showed a median forecast of 1 percent to 3 percent for the revision to 2013 GDP.

It isn’t clear whether NBS used an upgraded accounting method, which includes research and development as investment, and prices self-owned residency on estimated rental costs. Analysts including CICC’s Liang, Rhodium Group LLC’s Beibei Bao and Capital Economics Ltd.’s Mark Williams said the statistics bureau didn’t apply the new standard to the revision, and that output will probably be revised up again.

“Today’s revision is not the end of the story,” said Williams in a note. “The NBS has also been adjusting the national accounts data to bring them into line with international best practice. These changes now seem likely to be introduced early next year,” he said, adding that the change of methodology could lead to another increase of 3 to 5 percent in GDP.

— With assistance by Xiaoqing Pi, and Kevin Hamlin

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