China again revises GDP calculation method

China has revised the method of calculating its GDP for the second time in less than a year by including spending on research and development to better reflect the role of innovation to growth, the government said today amid global concerns over the data accuracy of the world's second largest economy.
Under the new method, research and development expenditure that can bring economic benefit to companies will no longer be calculated as intermediate consumption but as fixed capital formation,China's National Bureau of Statistics (NBS) said in a statement today.
With adoption of the new method the size of China's economy last year was about USD 130 billion larger than previously estimated.

The statistics agency claims that the new method "better reflects the contribution of innovation to economic growth."
It will use the method for future GDP calculations, and has also recalculated all the figures dating back to 1952.
Recorded GDP growth rates have changed slightly as a result. For instance, the growth rate for 2015 remained at 6.9 percent, revised up by 0.04 percentage point, state-run Xinhua news agency reported.

The new method was adopted after China switched to quarter-on-quarter calculations in September, rather than using cumulative data, in a bid to adhere more closely to "international" standards, the NBS said at the time.

Also in September, the International Monetary Fund called on China to improve its economic data, especially its growth rate.
Questions have repeatedly been raised about the accuracy of official Chinese economic statistics, which critics say can be subject to political manipulation.
As the economic slowdown continued, the world's second largest economy is shifting its focus from low-end manufacturing to high-technology products by boosting research and development.
China's GDP figure has consistently hit targets set by the ruling Communist Party.
Last year, its gross domestic product growth slowed to 6.9 per cent, the weakest annual rate in a quarter of a century for the world's second-largest economy, a mounting concern for global investors.

The figure was the slowest in the People's Republic since the 3.8 per cent of 1990, a year after the bloody Tiananmen Square crackdown rocked the country and isolated it internationally.
The performance of China, a major driver of the world economy, is a crucial concern for global investors.
Li's address telecast live all over the country began
with politically significant statement of Xi's elevation as the "core leader" by CPC, equating him to the status of party founder Mao Zedong and reformist leader Deng Xiaoping.
In the past one year, China's development has faced grave challenges posed by many problems at home and abroad, Li said.

"However, under the strong leadership of the Central Committee of the CPC with Comrade Xi Jinping at its core, we the Chinese people have risen to the challenge and worked hard to press ahead driving forward sustained, healthy social and economic development," he said.
Xi was elevated to the "core leader" status, gaining a higher status in the collective leadership system followed by CPC.
This year's NPC meeting along with the gathering of the advisory body - Chinese People's Political Consultative Conference (CPPCC) - carry political significance as it marks the last year of their five-year tenure.
Xi, regarded as the most powerful leader in recent Chinese history, himself is on the verge of completing five years of his 10-year tenure.

A new party Congress was due to be held later this year to revamp the leadership.
Only Xi and Li were expected to remain in the top leadership as the rest of the senior leaders in key party posts were expected to retire and filled with new officials which was further expected to reinforce Xi's power base.
Defending the move to lower the target, Li said it is in line with both economic principles and realities, adding that it will help stabilise market expectations and facilitate the country's structural adjustments.
"An important reason for stressing the need to maintain steady growth is to ensure employment and improve people's lives," Li said.

This year's target for urban job creation is over 11 million, up by onemillion from 2016, underlining the greater importance China attaches to employment.
China's year-on-year growth has slowed for six years in a row, falling from a growth rate of over 10 per cent in 2010.
The consumer price index rose by 2 per cent in 2016. Industrial profits rose 8.5 per cent, reversing the previous year's drop of 2.3 per cent. Energy consumption per unit of GDP fell by 5 per cent, Li said.
"Both the quality and efficiency of economic performance improved last year," Li said.
While the deficit-to-GDP ratio stays unchanged from last year, the government fiscal deficit is set at 2.38 trillion yuan, a year-on-year increase of 200 billion yuan.

Efforts will be made to encourage a greater flow of financial resources into the real economy, particularly in support of agriculture, rural areas and farmers, and small and micro businesses, Li said.