BEIJING, Dec. 14 -- China is likely to declare itself
the world's fourth largest economy next week, having leapfrogged Italy, France
and Britain, helped by a likely huge revision of its gross domestic product
Economists say the National Bureau
of Statistics (NBS), which is due to release part of the results of its first
national economic census on Dec. 20, is likely to put a much bigger figure on
the size of China's services sector.
The South China Morning Post, citing unnamed
economists, reported on Tuesday that the agency would probably revise GDP by as
much as $300 billion, or about 20 percent of 2004 output.
A revision of that magnitude could catapult China
from the world's seventh-largest economy into fourth spot, now occupied by
Jim O'Neill, chief global economist at Goldman Sachs
in London, said China could attain that status even without such a big revision
based on growth rates and currency changes in 2005.
Not only has China grown far more quickly than Italy,
France and Britain this year, but the yuan has risen about 2.5 percent against
the dollar, further boosting its output when measured in dollars. The euro and
sterling, by contrast, have fallen.
"China could squeak in ahead of Britain even without
a revision," O'Neill said. "It just goes to show how much it's contributing to
the world economy."
Economists said an upward revision of 20 percent, as
reported by the Hong Kong-based South China Morning Post, would be in line with
their own estimates -- or could even be too modest.
Chen Xingdong, chief China economist for BNP Paribas
Peregrine in Beijing, said he would not be surprised if the NBS revised up its
estimate of China's GDP, which totalled $1.65 trillion in 2004, by 15 percent to
China's number-crunchers have failed to capture the
boom in small and medium-sized industrial enterprises, Chen said.
"We always argue that it has been largely
underestimated for a long, long time," he said. "Even a number like 15 percent
is not that large for us."
Dong Tao, chief economist for non-Japan Asia at
Credit Suisse First Boston (Hong Kong) Ltd., said China's GDP would still be
understated even if it was revised up by $300 billion.
"There's a massive under-reporting of GDP in the
service sector," Tao said.
He cited the relatively low quality of data
collection in China as one reason for that. Economists have long pointed to
shortcomings in China's statistics, due to a central planning legacy that put
priority on collecting data on the production of physical goods from state-owned
Tao said another reason was that many service
enterprises fall through the statisticians' net because they fail to report
income for tax reasons.
"Just take a walk into any restaurant in Shenzhen or
Beijing. If you buy a meal without asking for the receipt, for tax reasons these
things will not be in China's GDP," he said.
Still, Tao said that, on CSFB's calculation, China
would probably need another year before it could catch up with Britain, whose
GDP totalled $2.14 trillion in 2004, according to the World Bank.
France came fifth in the World Bank's rankings, with
2004 GDP of $2.00 trillion, and Italy sixth, with output of $1.67 trillion. The
United States, followed by Japan and Germany, topped the list.
(Source: China Daily)