Data released this week showed that the mainland economy grew 7.7 per cent last year, suggesting that the imbalance is worsening, with consumption unchanged at just under 50 per cent of gross domestic product but investment growing.
Some economists, though, say official statistics have it wrong. To avoid taxes, consumers routinely get employers to buy stuff for them. That means the country has underestimated how much consumers spend and has exaggerated the lopsided nature of China's US$9.4 trillion economy.
The implications of their research are far-reaching, at least statistically. If two economists are right, not only do consumers represent a larger part of the mainland's economy than thought, but estimates of its household savings rates may be inflated, investment's dominance may be overstated and China's economy may be larger than current estimates.
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Re-Estimating China's Underestimated Consumption
28 page pdf download
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Some economists, though, say official statistics have it wrong. To avoid taxes, consumers routinely get employers to buy stuff for them. That means the country has underestimated how much consumers spend and has exaggerated the lopsided nature of China's US$9.4 trillion economy.
The implications of their research are far-reaching, at least statistically. If two economists are right, not only do consumers represent a larger part of the mainland's economy than thought, but estimates of its household savings rates may be inflated, investment's dominance may be overstated and China's economy may be larger than current estimates.
Re-Estimating China's Underestimated Consumption
28 page pdf download
Read more »
