Beijing has sought to play down claims China is now the world’s largest economy, as official data yesterday showed that its GDP grew at its slowest pace in 24 years in 2014.
Using statistical measures that adjust for the purchasing power of different currencies, China overtook America as the world’s largest economy last year.
But Ma Jiantang, the head of Beijing’s National Bureau of Statistics, emphasised yesterday that China disagrees with the price calculations underpinning the estimate. “The Bureau does not countenance these claims by some scholars and media organisations,” he said at a press conference. “We think the methodology might have underestimated actual price levels in China and overestimated China’s GDP. We don’t agree with the results.”
The agency did, however, confirm that China’s economy grew by 7.4 per cent in the year – the weakest growth rate it has registered since 1990, and just beneath the official target of 7.5 per cent. It was the first time the target had been missed since the Asian financial crisis of 1998.
China’s growth has been propped up since the global financial crisis by a surge of bank-funded property and infrastructure investment. But house prices are falling and analysts expect the correction to continue, pushing real estate construction output lower.
The IMF expects China to continue slowing down. Yesterday it forecast growth in 2015 to be 6.8 per cent, a downgrade from its October estimate of 7.1 per cent. The fund slashed its global growth estimate over the next 12 months to 3.5 per cent, down from 3.8 per cent.
Olivier Blanchard, chief economist of the IMF, said that although lower oil prices would boost China’s GDP by 1 per cent, Beijing would probably offset that benefit by continuing to rein in credit. “The housing slowdown is more serious than we thought earlier” he said.
“We believe that much of the effect on spending of the increase in real income coming from lower oil prices will be offset by measures by the Chinese authorities to take care of various imbalances faster, to be tougher on shadow banking, to reduce public investment”.
China’s leaders have long been ambiguous about adjusted estimates of the size of their economy. They are keen to emphasise the country’s size, so they can push for more power in multinational forums such as the IMF and the World Bank. But they fear that perceptions of China’s dominance will result in calls for Beijing to pay more to mitigate climate change, and to take on other international responsibilities.
Using purchasing power parity comparisons Chinese GDP was $17.63 trillion (£11.6bn) in 2014, just ahead of America’s $17.41. But China’s GDP per person was still only $12,893 a year, versus $54,678 in the US.
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