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Supplement of Issues 2005 - January 2006

Major Economic Indicators of Shanghai 2004 Revised

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China’s first national economic census ended in December 2005. As a result, China’s GDP for the year 2004 was 15,987.8 billion Yuan (ca.US$1,950 billion) at current prices, representing an increase of 2,300 billion Yuan or 16.8 % over the preliminary estimated figure using regular annual statistical data. The new figure makes China the world's sixth largest economy, following the US, Japan, Germany, the UK and France, according to IMF standards.

The proportion of the economy made up by primary industry (agriculture), secondary (traditional) industry and tertiary (service) industry is 13.1 %, 46.2 % and 40.7 %, as compared to earlier estimates of 15.2 %, 52.9 % and 31.9 %. The shares of the primary and secondary industries was revised downwards by 2.1 and 6.7 percentage points respectively, while that of tertiary industries rose by 8.8 percentage points. Of the newly added 2,300 billion Yuan, tertiary industry alone accounts for 2,130 billion Yuan, a share of 93 % of the total.

Shanghai also announced its revised GDP for 2004, which reached 807.28 billion Yuan (ca.US$98.4 billion), gaining 8.4% from the previously reported figure of 745.03 billion Yuan. That means 62.25 billion Yuan worth of income was not reported in Shanghai's GDP of the year 2004.

The city’s GDP included 8.35 billion Yuan in valued-added output generated by primary industry, 389.2 billion Yuan by secondary industry and 409.7 billion Yuan by tertiary industry, so that the proportion of primary industry, secondary industry and tertiary industry in the city’s economy was 1.0%, 48.2% and 50.8%, respectively, compared with the former figures of 1.3%, 50.8% and 47.9%.

The service sector was the most underestimated of the three main segments all over the country. Of the 62.25 billion Yuan miss-calculated amount, 85.4 % came from the service sector. Nevertheless, Shanghai’s under-estimated figure (8.4 %) is much lower than that of other areas such as Beijing (42%), Shenzhen (17.5%) and Guangdong (17.6%). In the national economic census, Shanghai showed quite a developed service sector as well as a better statistical regime.

For a long time, the Chinese government adopted the Material Product System (MPS), which was developed under the centrally-planned economy and measures economic activity based on output rather than consumption or expenditure, so that the service part can be easily underestimated. That is why the old statistics regime tends to understate the actual level of activity. In fact, along with economic reform, China has seen a diversified economic development in terms of ownership, and in particular, a dynamic development of private and individual-run activities in IT, transport, financial services, real estate, wholesale and retail, catering, entertainment and other emerging service-sectors. The scope of the tertiary industry is becoming wider and more complex due to a large number of units, resulting in a certain degree of under-coverage. According to the National Bureau of Statistics (NBS), the number of state-owned companies in China fell 48% in the three years to the end of 2004 while the number of private companies rose by about 50%.

By using standardized compilation methods developed by NBS in the first national economic census, China’s statistics regime came out from the dilemma that the yearly national GDP figures calculated by NBS always differed from the aggregated figure of the 31 provincial statistical authorities.

The GDP revision confirmed loopholes in the country's existing data collection mechanisms. Revised statistics help clarify policy-makers' perceptions of the country's economic structure and help them to prepare for the new development programme. According to the State Council, the survey results will be used as a basis for the central government and for local governments in compiling the 2005 national account statistics, highlighting economic and social development for the 10th Five-Year Plan period (2001-2005), and in preparing the 11th Five-Year Development Program as well as the 2006 annual economic plan.

The new figures provide good news for Shanghai and China, suggesting that the economy is healthier, more diversified and more sustainable than previously estimated. The new figures relieve some worries that the economy was too heavily dependent on investment and the outside world. As the census shows, the ratio of the investment in fixed assets to GDP has dropped from 51.3% to 43.8%, and the degree of reliance on other economies (the ratio of the country’s foreign trade to GDP), though still very high, dropped from 69.8% in 2002 to 59.8%.

But the major problems of China's economy, including her high energy consumption, her low economic efficiency and the extensive mode of economic growth, have not been changed with the adjustment of statistical figures. Furthermore, international pressure on RMB evaluating will become stronger as a result of the new data.

LI Rongzhang


Consulate General of Switzerland
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