China has revised up the size of the world’s second-largest economy by adding research and development (R&D) spending into its calculations for gross domestic product, the statistics bureau said yesterday.
The move will help bring China’s calculations for the value of its goods and services more in line with global standards set by the United Nations and other world organisations, amid widespread investor scepticism about the accuracy of the country’s official data. The new method has increased the value of GDP but has only slightly affected annual growth rates, the National Bureau of Statistics (NBS) said on its website.
Growth for 2015 was amended marginally, but basically remained at 6.9%, the slowest in a quarter of a century.
The value of 2015 GDP was revised up by 1.3% to 68.55tn yuan ($10.3tn) from the previously announced 67.67tn yuan, the bureau said.
“Rapid growth of R&D spending and activities have played an increasingly important role in promoting economic growth, but the traditional accounting method cannot fully reflect such an impact,” the bureau said. “This has been a long time coming. Obviously, in terms of the timing, it is quite convenient for them in some respects,” said Julian Evans-Pritchard at Capital Economics in Singapore.
“They’re already starting to push up against their growth target for this year and more generally for the 5-year target of 6.5% growth.
This makes that a little easier because R&D spending has been increasing more rapidly than the economy as a whole.”
China will report second-quarter growth figures on July 15.
The bureau said the change mainly reflects contributions to growth from R&D spending. Such spending that brings about economic benefits for firms will be calculated as fixed capital formation, rather than intermediate consumption. China aims to boost its R&D spending as a share of GDP to 2.5% by 2020.
The GDP growth rate for 2014, also adjusted fractionally, stayed at 7.3%, while growth in 2013 was revised to 7.8% from 7.7%.
China also is studying new ways to assess the economic contribution from industries seen as part of the “new economy”, such as biotech firms and online retailers, a deputy head of the statistics bureau said in speech published on Sunday.