China changes the method of calculating gross domestic product, adding to the calculations the costs of research and development (R&D). This will increase the value of GDP, but almost no change in the growth rate.
According to the National Bureau of statistics of China changes in the calculation methods of GDP will bring Chinese standards in line with international requirements established by the United Nations and other world organizations.
According to the authorities, this should soften the skepticism among investors and economists about the accuracy of official data.
The new technique increases the total size of GDP, but the National Bureau of statistics says that the impact on the annual growth rate will be minimal.
In accordance with the new methodology of the GDP for 2015 was revised to 1.3% upward to 68,55 trillion yuan ($10.3 billion) compared to the previously announced 67,67 trillion yuan.
Recall that in 2015 the Chinese economy grew by only 6.9%, which was the lowest rate in a quarter century, and in 2016 the official goal implies growth of 6.5-7%, although some investment banks and analysts did not rule out an increase in GDP of only 6.4%.
The statistical office noted that “the rapid growth of expenditures on R&D is playing an increasingly important role in promoting economic growth, but the traditional accounting method can not fully reflect this impact.”
Now China is almost guaranteed to be in the target range for GDP growth, as spending on research and development are increasing more rapidly than the economy as a whole. Costs which bring economic benefits to the companies, will be calculated as fixed capital formation and not intermediate consumption.
For example, the GDP growth rate for 2014 has changed slightly, remaining at 7.3%, while for 2013, the economy increased by 7.7%, as previously thought, and by 7.8%.
Data for the second quarter of 2016, will be published July 15.
China seeks to increase spending on R&D to 2.5% of GDP by 2020. in addition, Beijing is constantly exploring new ways of assessing the economic contribution of industries speaking about the “new economy”. It is possible that in the future will also change the method of calculation of the effects of biotech companies and online stores based on the size of GDP.
