BEIJING—China's economy may suddenly catapult past those of Italy, France and Britain in size. How suddenly could the leap occur? Try Tuesday.
That's when China's National Statistics Bureau will announce a revision of economic growth figures that's expected to push China from the world's seventh-largest economy to No. 4.
It's more than statistical sleight of hand: Economists in China say they've discovered about $300 billion worth of economic output, mainly in the services sector, that they couldn't measure before, an amount worth 17.5 percent of last year's output.
The revision essentially moves up the day when China may surpass Germany and Japan and catch up with the United States in terms of economic output.
"China may become the world's largest economy much earlier than 2041, which was projected by our ... report in 2003," a research arm of the investment bank Goldman Sachs said in a report out of Hong Kong this week.
The report says the amount that China will add to its economy isn't a negligible sum. It's equivalent to "the size of Taiwan's economy, or half of India's economy."
One economics professor in Beijing, Yang Fan, said he wasn't at all surprised that the services economy in China was larger than previously estimated, in part because the informal economy thrived.
"Many small companies, like restaurants, evade taxes. They may not have legal registration. So it is hard to collect information on them," said Yang, an economist at China University of Political Science and Law.
Moreover, smuggling and counterfeiting of consumer goods, as well as the sex trade, are major underground businesses in China, difficult to measure in terms of economic value, Yang said.
Per capita economic output—or gross domestic product—will jump from $1,277 in 2004 to about $1,738 this year, according to a report Thursday by Standard Chartered Bank's Shanghai branch.
According to Standard Chartered's calculations, the new figures will allow China to leapfrog Italy and France this year in terms of the size of the economy. With an 8 percent fall in Britain's pound sterling relative to the dollar this year, "China will be bigger than the U.K. economy in U.S. dollar terms, too," the report said.
China's currency, the renminbi, has risen by about 2.5 percent against the dollar this year, adding to the size of its economy.
The statistical revision follows a first-ever National Economic Census, which gathered data from 4 million industrial enterprises and 30 million private businesses, the National Statistics Bureau said.
China's economy has been growing at an average 9 percent a year since the late 1970s, a rate of sustained growth never before seen in a major world economy.
The refiguring of the GDP may prove to be a political boost to China's leaders, who can claim they're closer to a target of achieving per capita output of $4,000 by 2020.
"It's a good thing. It will strengthen China's international status in the world," Yang said. "Actually, I think it should be even 20 percent higher. Why? Because the renminbi is still undervalued by about 20 percent."
(c) 2005, Knight Ridder/Tribune Information Services.
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