Topic_4_Growth - Economics 162 The Economy of China Topic 4...

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Unformatted text preview: Economics 162 The Economy of China Topic 4 China s Modern Growth Experience: A Review of the Evidence Professor David Roland-Holst Department of Agricultural and Resource Economics Tuesday and Thursday, 330-5pm, 10 Evans Hall Roland-Holst 2 Economics 162 Economics 162 Economics 162 GDP: Data and Problems I The Official data (After 2009 Revision) Average annual growth (1979-2009): 9.9% 2005: 11.3% 2006: 12.7% 2007: 14.2% 2008: 9.6% 2009: 9.2% Questions Is the official data reliable? Is the growth rate overstated? Alternative method of estimation: proxies Using electricity consumption growth rate, if elasticity of electricity consumption is constant Roland-Holst 3 Economics 162 Economics 162 Economics 162 GDP: Data and Problems II Possible problem (1) Miscalculation of the GDP deflator Growth rates could be overstated by 1-2% If so, growth is around 8% and growth per capita is around 7% Possible problem (2) Reporting incentives by local officials Overstating at trough and understating during boom Overstating in poor areas and understating in rich areas Possible problem (3) Roland-Holst 3 Economics 162 Economics 162 Economics 162 GDP: Data and Problems II Possible problem (1) Miscalculation of the GDP deflator Growth rates could be overstated by 1-2% If so, growth is around 8% and growth per capita is around 7% Possible problem (2) Reporting incentives by local officials Overstating at trough and understating during boom Overstating in poor areas and understating in rich areas Possible problem (3) Missing data (small-scale, private firms) Roland-Holst 4 Economics 162 Economics 162 Economics 162 Growth is Real Growth is still very impressive even under possible downward revision Comparable growth to fastest growing economies Population almost three times that of 8 high performing economies: Japan, South Korea, Taiwan, Singapore, Malaysia, Thailand, and Indonesia Growth measurement in physical terms (not in value) Production in steel, automobile, housing, highway etc. Consumption per capita Roland-Holst 5 Economics 162 Economics 162 Economics 162 2004 Economic Census and GDP Revision GDP revision based on the first economic census in 2004 Announcement on December 20, 2005 Upward revision of 2004 GDP by 16.8% (2.3 trillion yuan or $285 billion) to 16 trillion yuan 2.13 trillion yuan was added to service sector 19 provinces were up, 12 provinces down Main reasons To collect data in a more inclusive way Roland-Holst 6 Economics 162 Economics 162 Economics 162 2004 Economic Census and GDP Revision Growth rates adjustment from 1993 to 2004 2000: from 8.0% to 8.4% 2001: from 7.5% to 8.3% 2002: from 8.3% to 9.1% 2003: from 9.5% to 10.0% 2004: from 9.5% to 10.1% As a result adjustment for average growth rate in 1979-2004: from 9.4% to 9.6% Roland-Holst 7 Economics 162 Economics 162...
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Topic_4_Growth - Economics 162 The Economy of China Topic 4...

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