GDP data methodology adheres to accepted standard

Updated: 2016-01-25 08:04

By Xu Xianchun(China Daily)

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In the face of doubts over its GDP data, China is always attentive and adopts an open mind. It is willing to listen to any reasonable doubts and is willing to embrace constructive suggestions as an important reference for revisions to its GDP accounting.

But some foreign scholars argue that China's GDP growth rate is overrated as it uses the growth rate of only some industrial products to calculate the growth rate of the overall industrial added value through the method of weighted average. However, there exist obvious faults in their method of calculation.

First, the products chosen by the mare insufficiently representative. Too few categories of industrial products are chosen and such primary and traditional products as coal, oil and steel have a relatively large proportion. This results in GDP data that does not reflect the actual growth of the entire industrial sector. Given that new industrial products usually have a relatively fast growth rate, this method usually leads to the underestimation of China's industrial sector, especially at a time when the country is experiencing an economic downturn and an even more obvious slowdown in its traditional industrial output.

Being based on the quantity of industrial products, such a method also fails to reflect changes in the quality of these products. Using this method, economic growth emanating from technological progress and higher quality industrial products is usually ignored. According to the SNA, direct comparisons cannot be made for the quantities of different products if they have different qualities. A simple comparison will underestimate the economic growth caused by the higher product quality and thus the growth rate of the entire industrial sector will be underrated.

At the same time, the method also fails to reflect the changed structure of industrial products, which usually influences the growth rate of the sector. In fact, the choosing of some industrial out put is only applicable to the calculation of the growth rate of only a few industrial sectors. International practices also disapprove of such a method to calculate the growth of the entire industrial sector.

The author is deputy director of the National Bureau of Statistics.

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