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China’s GDP Measurement and Trends

1 China’s GDP Measurement and Trends

China’s GDP Measurement and TrendsEdit

Summary: China’s growth since opening up to capitalism in the 1970’s has been staggering. This growth can be attributed to sectors in manufacturing, tertiary industry, construction, tourism and agriculture.

GDP:Edit

Quick Stats:

China’s GDP currently makes up 12% of the World’s total overall GDP and currently is responsible for 6% of the worlds output.
China’s GDP (official exchange rate) is 4.22 trillion. (est. 2008 figures)
Its GDP (Purchasing Power Parity) is 7.8 trillion. (est. 2008 figures)
Despite having such a large GDP (ranked 4th in the world) its GDP per capita of $6,100.00 is only ranked 132nd in the world.

Consumption:Edit

China has traditionally consumed a very small fraction of what it produces. Its government is currently attempting to increase consumer spending to make up for the reduction of imports and exports caused by the global decline. This challenge is being undertaken through loosening consumer lending requirements as well as tax cuts. In 2007, personal household consumption made up approx 35% of GDP.

Investment:Edit

The personal savings rate in China has traditionally been around 50%. Much of China’s economic growth has come from direct foreign investment in infrastructure as well as from the higher savings and investment rates of China’s consumers.

Government Spending:Edit

The government has plans to spend the equivalent of 586 million dollars in the next two years through an economic stimulus package. Other government spending plans include a 26.5% increase in government spending in science and technology, as well as money specifically set aside for “green” energy. China’s government expenditures made up an estimpated 14% of overall GDP in 2007.

(Exports-Imports):Edit

China recently surpassed the Japan to become the world’s second largest exporter and is in position to overtake Germany for top honors. China’s 26% increase of merchandise exports is credited for this. In 2008 its estimated exports were $1.465 trillion f.o.b. and its imports were, $1.156 trillion f.o.b.

Trade PartnersEdit

Major export partners: US(19.1%), Hong Kong(15.1%), Japan(8.4%), South Korea(4.6%) and Germany(4%) 2007 trade data
Major import partners: Japan(14%), South Korea(10.9%), Taiwan(10.5%), US(7.3%) and Germany(4.7%) 2007 trade data

Future Growth:Edit

Many investment firms as well as the IMF and World Bank have reduced their forecasts for growth in China for the next two years due to the current global economic decline. Current projections range from 6.0% growth to 8.2%. These numbers are viewed with dismay in China since they are used to the double digit growth and have set a goal of 8% growth. It is predicted they will fare better than the most of the world in this global recession.

Key FiguresEdit

IMF expected growth rate: 6.7% in 2009 and 8% in 2010
World Bank expected growth rate: 6.5% in 2009.

Discrepancies and Risks:Edit

Due to China’s government’s history of devaluing the yuan, there are some inherent risks when using official figures for GDP and currency conversion rates. The calculated values will not reflect the true value of the Chinese economy or the subsectors when compared to purchasing power parity. This is done to make their goods seem cheaper to the rest of the world and increase manufacturing and exports. Other official economic values are suspected to be distorted such as unemployment (suspected to be reported artificially low).

ReferencesEdit

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