China's economic muscle 'shrinks:overestimated China's economy 40%

BillCosby · 12-17-2007, 10:52 AM

China's economic muscle 'shrinks'
Chinese bicycle repair shop
Despite China's boom, tweaks are needed to keep it running smoothly
China's economy, the world's second largest, is not as big as was thought, a report by the World Bank has claimed.

According to the bank, previous calculations have overestimated the size of China's economy by about 40%.

The revelation came after the bank updated the way it calculated the country's gross domestic product (GDP).

The bank said the findings meant China would not become the world's biggest economy in 2012 as forecast. It also meant China was poorer than estimated.

This in turn would influence future aid and investment plans, the World Bank said.

China gains extra aid from international institutions and has asked for help in climate change talks because of its status as a developing country.

Adjusting figures

BIGGEST ECONOMIES
US
China
Japan
Germany
India
Source: World Bank

Based on the World Bank's new research, China's economy is now worth some $5.33 trillion (£2.64trillion). Despite the drop in size, the economy was still the world's second largest, the bank said.

The US, at $12 trillion, is the world's largest economy.

The method used for the calculations is called "purchasing power parity", and corrects for differences in prices, which are lower in China than in Western countries, for the same goods.

However, the figures show that average incomes in China are still just 10% of those in the US. China averages $4,091 per person, while average income in the US is $41,000.

Based on current exchange rates, China's economy is only half as big, at $2.24 trillion.

MOST EXPENSIVE NATIONS
Iceland
Denmark
Switzerland
Norway
Iceland
Source: World Bank

In previous years, economists have tried to adjust their figures to take into account local prices in developing nations because they were often significantly lower than those in more industrialised countries.

However, the bank said that many of the prices which were being used were out of date and gave distorted GDP figures.

This time it has used updated prices to create more accurate figures.

Global shift

In its report, the World Bank found that five nations - the US, China, Japan, Germany and India - accounted for nearly half of the world's total GDP.

But they were not amongst the five most expensive places to live, with that honour going to Iceland, Denmark, Switzerland, Norway and Ireland.

In Africa, the main drivers of growth were South Africa, Egypt, Nigeria, Morocco and Sudan, which accounted for almost two-thirds of the continent's output.

DRS112 · 12-17-2007, 03:16 PM

interesting....bump.

Lolli · 12-17-2007, 03:34 PM

The timing of all this is very interesting (high US deficit, the rift between the US and China) - and 40% is a lot to be distorted by.

Why modify the way it calculates GDP at this very point in time when in previous years it wasn't an issue?

Despite that, I don't understand how China could reach super power status considering this:

Quote:

However, the figures show that average incomes in China are still just 10% of those in the US. China averages $4,091 per person, while average income in the US is $41,000.

The_Heretic · 12-17-2007, 04:16 PM

Given that still 75% of Chinese live in abject pvoerty [by international standards] we shouldn't be surprized.

BillCosby · 12-17-2007, 07:33 PM

Quote:

Originally Posted by lollipop

The timing of all this is very interesting (high US deficit, the rift between the US and China) - and 40% is a lot to be distorted by.

Why modify the way it calculates GDP at this very point in time when in previous years it wasn't an issue?

Despite that, I don't understand how China could reach super power status considering this:

When I suggested as much over @ BM some there/here got a good laugh out of it............ I guess it wasn't so funny afterall..............

The further you go away from the coast, Bejing the more poverty & filth you find.............

12-17-2007, 10:52 AM	#1 (permalink)
BillCosby The party of the pissed!! Join Date: Oct 2007 Posts: 4,504 My Mood: Thanks: 183 Thanked 119 Times in 92 Posts	China's economic muscle 'shrinks:overestimated China's economy 40% China's economic muscle 'shrinks' Chinese bicycle repair shop Despite China's boom, tweaks are needed to keep it running smoothly China's economy, the world's second largest, is not as big as was thought, a report by the World Bank has claimed. According to the bank, previous calculations have overestimated the size of China's economy by about 40%. The revelation came after the bank updated the way it calculated the country's gross domestic product (GDP). The bank said the findings meant China would not become the world's biggest economy in 2012 as forecast. It also meant China was poorer than estimated. This in turn would influence future aid and investment plans, the World Bank said. China gains extra aid from international institutions and has asked for help in climate change talks because of its status as a developing country. Adjusting figures BIGGEST ECONOMIES US China Japan Germany India Source: World Bank Based on the World Bank's new research, China's economy is now worth some $5.33 trillion (£2.64trillion). Despite the drop in size, the economy was still the world's second largest, the bank said. The US, at $12 trillion, is the world's largest economy. The method used for the calculations is called "purchasing power parity", and corrects for differences in prices, which are lower in China than in Western countries, for the same goods. However, the figures show that average incomes in China are still just 10% of those in the US. China averages $4,091 per person, while average income in the US is $41,000. Based on current exchange rates, China's economy is only half as big, at $2.24 trillion. MOST EXPENSIVE NATIONS Iceland Denmark Switzerland Norway Iceland Source: World Bank In previous years, economists have tried to adjust their figures to take into account local prices in developing nations because they were often significantly lower than those in more industrialised countries. However, the bank said that many of the prices which were being used were out of date and gave distorted GDP figures. This time it has used updated prices to create more accurate figures. Global shift In its report, the World Bank found that five nations - the US, China, Japan, Germany and India - accounted for nearly half of the world's total GDP. But they were not amongst the five most expensive places to live, with that honour going to Iceland, Denmark, Switzerland, Norway and Ireland. In Africa, the main drivers of growth were South Africa, Egypt, Nigeria, Morocco and Sudan, which accounted for almost two-thirds of the continent's output. __________________ Preventive war is not war!!!!Counter-terror is not terror
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12-17-2007, 03:16 PM	#2 (permalink)
DRS112 Administrator Join Date: Aug 2007 Posts: 6,355 My Mood: Thanks: 72 Thanked 116 Times in 86 Posts	interesting....bump.
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12-17-2007, 04:16 PM	#4 (permalink)
The_Heretic Master of Quill-Fu Space Invaders Champion! Pool Jam - 10 Minute Game Champion! Join Date: Oct 2007 Location: Taylorsville, UT [stuck in the 20th century]. Posts: 7,446 My Mood: Blog Entries: 6 Thanks: 36 Thanked 148 Times in 113 Posts	Given that still 75% of Chinese live in abject pvoerty [by international standards] we shouldn't be surprized. __________________ "Enough!!" -so rang Barack Obama's voice off the walls of Mile High Stadium
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