How reliable is China investment data?
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| Title | How reliable is China investment data?
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| Author | Zhu Tian, Zhang Jun and Liu Fang |
| Organization | China Europe International Business School; Fudan University |
| Email | ztian@ceibs.edu；junzh_2000@fudan.edu.cn；12110680009@fudan.edu.cn |
| Key Words | GDP by expenditure method; Capital formation; Investment in fixed assets; Final consumption |
| Abstract | Building upon the first two authors’ previous study on China’s consumption data, this paper further investigates the quality of China’s investment data, and assesses the reliability of the official statistics on the expenditure components of China’s GDP. We follow strictly the official method to estimate the annual gross capital formation expenditure from 2004 to 2012, and the resulting figures are significantly different from the official statistics. This implies that the “all society investment in fixed assets” data, which is the primary source in the estimation of gross capital formation expenditure, has grossly exaggerated the actual investments, and that official capital expenditure figures are not independently estimated as they ought to be. We conclude that the official capital formation figure is practically a residual item derived from subtracting the amount of estimated final consumption and net exports from the official GDP (based on the production cum income method) . As a result, the underestimation of China’s consumption expenditure has automatically been translated into the overestimation of its investment expenditure. Therefore, China’s official statistics of the individual expenditure components of GDP cannot be trusted as the basis for policy discussions and academic studies. The widely shared belief about China’s consumption being too low and investment being too high is based on just such distorted statistics. |
| Serial Number | WP898 |
| Time | 2015-07-14 |
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