Economic Watch: China’s new GDP calculation system to better reflect new economy

BEIJING (Xinhua) — By introducing a revised calculation system to measure its GDP, China is taking a step forward to meeting international standards and better reflecting the country’s development in new economic sectors.

The revision, the first of its kind since 2002, will be adopted to reflect China’s economic development “more truly and accurately,” according to Xing Zhihong, a spokesperson at the National Bureau of Statistics (NBS).

Changes to the calculation methods include framework adjustment, such as modifying population and labor calculation, as well as bringing the contribution of industries such as health care, tourism and new economy into the calculation, the NBS said in a statement.

The revision has also been made to adapt to “new situations and changes” in economic development and in line with the System of National Accounts 2008, an international standard for measuring a country’s economic activity, it said.

The new model also introduced new definitions and revised existing classifications, according to the NBS.

For instance, the concept of intellectual property products is introduced under the category of non-financial assets, while financial derivatives and equities held by employees will be counted as financial assets.

The implementation of the new GDP calculation system, which has just obtained cabinet approval, is yet to be started, Xing said.

Therefore, the calculation of China’s GDP for the first half of this year has not been affected, and stood at about 38.2 trillion yuan ($5.6 trillion), up 6.9 percent year on year.

The NBS will next work to carry out the new framework, but the full implementation will be a “gradual process” due to its sheer size, he said.

But part of the adjustment has already been made. In July 2016, the NBS announced that research and development expenditures that can economically benefit companies will no longer be calculated as intermediate consumption, but as fixed capital formation.

The move aimed at better reflecting the contribution of innovation to economic growth, which added 879.8 billion yuan to the 2015 GDP figure.

After the adjustment was announced, the NBS also released recalculated GDP figures from 1952 through the first quarter of 2016.

Under the new mechanism, GDP in 2015 was revised upward by 1.3 percent due to continuous growth in research and development spending and the accumulation of research and development investment stock, while the year-to-year growth rate was barely changed at 6.9 percent.

China’s innovation-driven new economic sectors are witnessing rapid development and playing an increasing role in the economy in recent years on back of government support.

In the first half of this year, the high-tech and equipment manufacturing sectors led the country’s industrial growth with year-on-year output increases of 13.1 percent and 11.5 percent, respectively, compared with a 6.9 percent rise in overall output.

Ning Jizhe, head of the NBS, has pledged to push forward statistical reform and improve data authenticity as China’s economic development enters a “new normal” period with expanding new economic sectors.

A new regulation on the implementation of the revised Law of Statistics was issued last month to improve the authenticity and reliability of official data, which provided specifications on how to organize and carry out surveys as well as rules to ensure transparency of relevant data.