Fuzzy GDP math

It’s hardly a secret that China’s reported GDP growth figures are less than reliable; premier Li Keqiang actually acknowledged that the numbers are “man-made and therefore unreliable” more than a decade ago. A new study from economists at the Chinese University of Hong Kong and the University of Chicago estimates just how inaccurate those figures are:

China has overestimated its nominal and real growth rates by about 2 full percentage points on average between 2008 to 2016, with the miscalculation increasing each year, according to a new study published on Thursday.

The results indicate that the actual size of China’s economy at the end of 2018 was well below the government’s official estimate. […]

Using the study’s findings and applying them to government figures starting with the level of nominal gross domestic product (GDP) at the end of 2007 and the growth rate for 2008, calculations by the South China Morning Post show that the current nominal size of the Chinese economy is about 18 per cent lower than the official level of 90 trillion yuan (US$13.4 trillion) at the end of 2018. […]

SCMP calculations show the adjusted nominal GDP level in China is about US$11.5 trillion using current exchange rates, still more than twice the size of Japan’s economy at US$5.16 trillion, but well below the economy of the United States at US$20 trillion.

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