主题：中国GDP总额超过日本的意义 -- 陈经

There are three ways to calculate GDP, Expenditure approach, Income Approach and production approach. China uses the production approach to calculate, while West uses Expenditure approach to calculate. And in Expenditure approach, you get Consumption, Investment and Trade Surplus and add them together, you get GDP. Chinese way is different, we use different sector production added value and added them together. Since China has an old Soviet style statistical system, the people and infrastructure already there. So they use that resource to collect the data. It is convenient for them. For example, for industry, they only collect data from enterprise with over 500 employees. For those below 500 employees, they use the latest census proportion data. The census happened in every decade.

In this way, there is no way to get Consumption, Investment data in West national accounts concept. But they have some other data that has been collected since 50s. So they use that as a substitute. So for Consumption, we got Total retail sales of social commodities, Chinese is called 社会消费品零售总额. The year 2009 number for it is 12.5 trillion, while the total GDP is 34 Trillion RMB. That is why the 36% consumption data come from. This consumption does not include any service consumption except hospitality industry. It does not include education, health care, housing, entertainment, financial, law service etc which all included in the West consumption concept. Chinese do not think education, health care, housing those kind of thing as consumption. Chinese regard those as cost/expense that reduce the ability to consume. If you know chinese and go to Chinese forum, you can find thousands of posts complain the high education/health care/housing cost prevent them to consume. In China, consume means buy real stuff. Apparently, they did not take economy 101.

So use this number as consumption is way underestimated the consumption role in China economy. That is why with almost every consume products, China market size ranks world top2 and people still say we not consume at all. If you compare the US retail number’s percentage in their GDP, it will be very similar to China percentage. There rent is 10% GDP, health care 14% or 18% GDP and they have so many lawyers and a big fat Wall Street there. They are all classified as consumptions. American people must be very satisfied with their top-tier financial service consumption. :lol:

Then let’s talk about investment. There is no investment data in West national account concept collected. Instead, they collect Fixed Asset Investment, Chinese term固定资产投资. This number has been collected for more than half century. The 2009 number is 22 trillion. People use this number as investment because it well collected and this number confused people. This number includes land purchase expenditure which exclude in West national accounts concept investment figure because they do not think it added any value to the economic activity. But in Chinese eyes, if you invest in a factory or building, you need buy the land and that is from their pocket, then of course it belongs to investment. Considered the high land price today in China, a big chunk of fixed asset investment is on land purchase.

Another one is old land/building/equipment purchase，for example, you want to enter one certain industry, you either buy new land and build your facility and install new machinery or you can buy one old factory and kicked in right away. Chinese number included this old land/building/equipment purchase and West investment does not included. For Chinese, no matter old or new, your money spend on investment, of course it can be called investment. For West concept, it is just change hand without no new value added, so not included in their investment figure.

One more part, is the Chinese fix asset investment figure does not included stock change, while the West concept do. We regard this as investment on fixed asset. So what hell is stock about. All these three things combine, you got a overestimated investment.

For trade surplus, we do not include service trade surplus. China got a 30 billion deficit on a 280 billion service trade last year. Anyway it is not that big.

BTW:　China authority never claimed the社会消费品零售总额 is the corresponding part of West Consumption and 固定资产投资, the corresponding part of West Investment. The economics geniuses interpreter that way.