China’s economy might be bigger than previously thought

If you’re looking to turn your world upside down today, try this on for size. What if China’s economy is actually bigger than everyone thinks?

Did your head just go “Boom?” Well, then maybe this will blow your mind: The Wall Street Journal is putting forth that idea. Yes, one of Western media’s biggest proponents of China’s heading for a hard landing, thinks that China’s government isn’t over reporting economic statistics, but instead, underselling them.

It seems a study by Daniel Rosen and Beibei Bao for the Center for Strategic & International Studies says that the $10 trillion economy China reported last year is actually closer to $11.5 trillion.

The study says China calculates gross domestic product using an antiquated methodology that undercounts expenditures on things like services and research and development.

Of course, WSJ couldn’t leave it at that.

If China is a lot bigger than currently thought, the study suggests it has the potential to surpass the size of the US economy as early as 2020. Of course, that works on the flipside as well.  Any downturn in the Chinese economy will have a greater effect on the global economy.

Full article: China’s economy might be bigger than previously thought (Asia Times)

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