Having fiddled with its GDP figures once more, China became the world’s third largest economy in 2007, passing Germany and closing in on Japan, which is number 2 after the U.S.
The National Bureau of Statistics said growth in 2007 was 13%, not 11.9% as previously stated, itself a revision from an initial figure of 11.4%. The latest change tweaks an extra $114 billion into the economy, all of which will do little to end some lingering doubts among economists about the robustness of China’s economic statistics.
Using the conventional market exchange rates, Germany’s GDP was $3,3 billion in 2007, China’s GDP was $3.4 billon on the new estimate, Japan’s, $4.4 billion and the U.S.’s $13.8 billion. Private economists reckon that China will catch up with Japan within five years. How long until it surpasses the U.S.? Goldman Sachs has pencilled in the year 2040.
While there is no doubt that the economy has grown by leaps and bounds since Deng Xiaoping inititated economic reform three decades agao, there there are famously lies, damned lies and statistics. China remains relatively poor. If you look at GDP per capita in purchasing power parity terms, which adjusts for price differences between countries to reflect buying power of local incomes, as the World Bank does, rather than comparing GDP at market exchange rates, China ranks as the 122nd richest country.
That said, as the FT and others point out, the latest GDP data “will reinforce the case to give China and other large emerging economies a bigger role in global financial decision-making.” Another reason for that is what is likely to be an overlooked point in the China-Germany economic comparisons. China is about to overtake the European country as the world’s largest exporter.