China's transition to consumption-led growth maybe more advanced than previously thought,because
some analysts are already saying that China miscalculates its consumption data.
We can find often coverage in western press of the building of ghost cities,redundant investments in
certain industries,building of roads well in advance of present needs,etc
China's high savings rate is the other side of the equation,for the high investment rate that this economy
has.
It is widely believed that China's consumption rate is too low,and that the country's rapid growth has been led by investments and exports.
Jun Zhang and Tian Zhu* argue that official data underestimates China's household consumption. The true consumption rate is 10% higher than the official.
First, housing consumption is grossly underestimated due to the construction cost-based method.
Second, a lot of private consumption is paid for by companies but can’t be accounted for in
official statistics. Third, and most important,high-income households are significantly
underrepresented in the household surveys upon which household consumption statistics are based. Our re-estimation suggests that the rate of China’s consumption is more than 60% of GDP, considerably higher than the official 48-49% of GDP.
"Before proceeding, we first distinguish between two types of household consumption expenditure in China.
The first one ,which we will call the explicit expenditures are the value of goods and services that are either bought,or in the case of rural households,produced by households,or provided by employers(in-kind consumption). The second type,which maybe called implicit expenditure,includes imputed rents(for owner occupied housing),costs of financial services and health insurance and public and employer-paid healthcare expenditure.
China's household consumption is estimated primarily from urban and rural household income/expenditure survey data,which as formerly mentioned,only measures explicit expenditures".
*Re-estimating China's Underestimated Consumption Jung Zhang and Tian Zhu
David Pilling. Asia Editor of the Financial Times
some analysts are already saying that China miscalculates its consumption data.
We can find often coverage in western press of the building of ghost cities,redundant investments in
certain industries,building of roads well in advance of present needs,etc
China's high savings rate is the other side of the equation,for the high investment rate that this economy
has.
It is widely believed that China's consumption rate is too low,and that the country's rapid growth has been led by investments and exports.
Jun Zhang and Tian Zhu* argue that official data underestimates China's household consumption. The true consumption rate is 10% higher than the official.
First, housing consumption is grossly underestimated due to the construction cost-based method.
Second, a lot of private consumption is paid for by companies but can’t be accounted for in
official statistics. Third, and most important,high-income households are significantly
underrepresented in the household surveys upon which household consumption statistics are based. Our re-estimation suggests that the rate of China’s consumption is more than 60% of GDP, considerably higher than the official 48-49% of GDP.
"Before proceeding, we first distinguish between two types of household consumption expenditure in China.
The first one ,which we will call the explicit expenditures are the value of goods and services that are either bought,or in the case of rural households,produced by households,or provided by employers(in-kind consumption). The second type,which maybe called implicit expenditure,includes imputed rents(for owner occupied housing),costs of financial services and health insurance and public and employer-paid healthcare expenditure.
China's household consumption is estimated primarily from urban and rural household income/expenditure survey data,which as formerly mentioned,only measures explicit expenditures".
*Re-estimating China's Underestimated Consumption Jung Zhang and Tian Zhu
David Pilling. Asia Editor of the Financial Times
