China's freight growth up 9.3% in 2017 | Xinhua

[Martian2]

China's economy can be broadly separated into two categories: hardware/goods (Huawei, Lenovo, Haier, Xiaomi, SANY, DJI, etc.) and software/services (Baidu, Alibaba, Tencent, etc.).

Regarding China's hardware economy, the Chinese freight growth boomed by 9.3% in 2017. See Xinhua citation below.

China's hardware economy has two components: quantity and quality. The quantity increased by 9.3%. However, we know that China's technology quality increases every year. For example, the Huawei phones shipped each year contain more powerful computer processors.

Thus, China's claim of 6.9% economic growth for 2017 could be conservative.

We know China's freight growth increased by 9.3% in 2017. We also know the average value of the products being shipped contains more advanced technology, which means the products are more valuable.

Combined, 9.3% freight growth + x% advanced technology growth = 10%+ "economic" growth in China's hardware economy

Yet, China is only claiming a 6.9% economic growth in its economy. There is a school of thought that says China is understating its real economic growth.
----------

China's freight growth steady in 2017 | Xinhua (January 31, 2018)

"China's railways, highways, waterways and civil airlines carried a total of 47.15 billion tonnes of cargo last year, up 9.3 percent from the 2016 level, according to data from the National Development and Reform Commission."

 

[Martian2]

Gross Domestic Product (GDP) is defined as the total value of the goods (tangible) and services (intangible) produced within a country.

We know China's freight growth increased 9.3% in 2017. We also know the goods contained superior technology (compared to the prior year) and thus, is more valuable. The increase in freight goods value must be over 10%.

The value of Chinese construction in 2017 increased by about 10% (from $718 billion in 2016) to $783 billion in 2017.

Though it is quarterly data, the representative sample shows China's services economy grew by 7.7%.

How in the world did China's economy end up with an annual 6.9% growth rate for 2017?

Goods: 10%+ value increase
Construction: 10% increase
Services: 7.7%

China's 2017 economic growth: 6.9% ?! (Is this possible when the GDP components are 7.7% to 10%+ increase?)
----------

China - Construction and Green Building | Export.gov (July 25, 2017)

----------

China Economic Outlook: Q3 2017 | EuroMonitor International (October 2, 2017)

 

[TaiShang]

China's economy can be broadly separated into two categories: hardware/goods (Huawei, Lenovo, Haier, Xiaomi, SANY, DJI, etc.) and software/services (Baidu, Alibaba, Tencent, etc.).

Regarding China's hardware economy, the Chinese freight growth boomed by 9.3% in 2017. See Xinhua citation below.

China's hardware economy has two components: quantity and quality. The quantity increased by 9.3%. However, we know that China's technology quality increases every year. For example, the Huawei phones shipped each year contain more powerful computer processors.

Thus, China's claim of 6.9% economic growth for 2017 could be conservative.

We know China's freight growth increased by 9.3% in 2017. We also know the average value of the products being shipped contains more advanced technology, which means the products are more valuable.

Combined, 9.3% freight growth + x% advanced technology growth = 10%+ "economic" growth in China's hardware economy

Yet, China is only claiming a 6.9% economic growth in its economy. There is a school of thought that says China is understating its real economic growth.
----------

China's freight growth steady in 2017 | Xinhua (January 31, 2018)

"China's railways, highways, waterways and civil airlines carried a total of 47.15 billion tonnes of cargo last year, up 9.3 percent from the 2016 level, according to data from the National Development and Reform Commission."

I anticipate value-added in China's exports to grow exponentially by the mid-2020s:

***
http://www.china.org.cn/business/2018-01/31/content_50366898.htm
Top-level design of Made in China 2025 completed
China Daily, January 31, 2018

The top-level design of China's Made in China 2025 strategy, the country's manufacturing upgrade program, has been completed, Miao Wei, minister of industry and information technology, said on Tuesday, Shanghai Securities News reported.

According to Miao, a group of key landmark programs and projects have been launched in areas such as manufacturing innovation, intelligent manufacturing and green manufacturing, and the country has climbed to a new level in building a manufacturing powerhouse.

On August 30, 2016, the Ministry of Industry and Information Technology (MIIT) announced China will set up around 40 national manufacturing innovation centers by 2025, according to Xinhua.

Miao said five national manufacturing innovation centers have been completed so far and 48 provincial manufacturing innovation centers have been nurtured, which has formed a manufacturing innovation system that takes the national innovation center as the core node and the provincial manufacturing innovation centers as important supplements.

In priority areas such as large aircraft, integrated circuit, new material, aircraft engine and gas turbine, 5G as well as new energy vehicles, positive results have also been achieved, Miao said.

Last year, a total of 331 major projects to strengthen industrial development got support from the state, according to the minister. Bottlenecks in some key areas such as the gear transmission system of high-speed train and pump seal used in nuclear power generation system have been preliminarily solved.

In the area of intelligent manufacturing, Miao said the comprehensive standardization and new model application of 428 intelligent manufacturing projects have made positive progress so far, 206 projects conducted pilot demonstrations, 22 national intelligent manufacturing standards have been released, and a number of digital workshop and smart factory have been initially built.

To bolster a green manufacturing system which takes green standard, green factory, green product, green industrial park and green supply chain as the core, the MIIT has supported a total of 225 major green manufacturing projects, Miao said.

The nation has also made great technological achievements in high-end equipment innovation projects, according to Miao. For instance, C919, China's first home-developed large passenger plane, made its maiden flight in Shanghai last May; the Chinese-made AG600, the world's largest amphibious aircraft, carried out its maiden flight last December; Blue Whale 1, the ultra-deep-water semisubmersible drilling rig, conducted successful tests in the South China Sea last May; and the CR400, with a maximum operating speed of 350 kilometers per hour, became the world's fastest wheeled train in commercial use.

To fully implement Made in China 2025 strategy, Miao said the MIIT will focus on the following works this year.

It will continue to boost the manufacturing innovation center construction projects, the projects to strengthen industrial development, intelligent manufacturing projects, green manufacturing projects and high-end equipment innovation projects.

It will set up 'Made in China 2025' national demonstration zone, nurture several world-class advanced manufacturing industry clusters and promote the integrative development of manufacturing sector and internet.

In addition, the ministry will improve the quality of manufacturing industry's supply system and optimize the development environment of the industry.

*
China's 2017 industrial growth beats expectations

By CGTN's Zhao Yuheng
2018-01-31

Last year saw several major breakthroughs in the Chinese industrial sector. China's first commercial airliner, the C919, took to the skies for the first time; the same is true for China's new amphibious aircraft, the AG600. Several choke points in the areas of nuclear power and machine tools have also been addressed.

Strong growth momentum

China's Ministry of Industry and Information Technology (MIIT) has pointed out that industrial growth in 2017 has surpassed expectations. Electronics and equipment manufacturing were the strongest growing sectors, expanding by 13.8 percent and 10.7 percent respectively.

Consumer product manufacturing grew by 7.6 percent, while the industrial Producer Price Index (PPI) saw a year-on-year increase of 6.3 percent, ending a continuous drop since 2012.

CGTN Photo

The rise in productivity was coupled with more efficiency. In 2017, China's industrial capacity utilization climbed to 77 percent, reaching a five-year high. Energy usage dipped by 4.3 percent, and water consumption was down six percent.

Made in China 2025

The ministry is also laying out plans for 2018 in line with the goals in the "Made in China 2025" plan. The government wants new demonstration zones and industrial clusters established.

A bullet train on the production line /VCG photo

"Chinese industry policies are focused on building a good market environment," said Miao Wei, minister of Industry and Information Technology.

"Made in China 2025 will always follow a market-driven, government-guided principle."

Miao also stressed that the plan welcomes all players who wish to take part.

"All our policies are applicable to any enterprise, be it foreign or domestic, that wish to take part in the Made in China 2025 plan. China will always keep its door open to foreign capital," he said.

 

[Martian2]

Let's calculate China's 2017 economic growth rate.

China's economy comprises 49.5% (tangible) goods and 50.5% (intangible) services.

China Trumpets Its Service Economy | Bloomberg BusinessWeek (January 28, 2016)
"Jan 28, 2016 - Services grew 8.3 percent last year and for the first time generated more than half of gross domestic product, or 50.5 percent. Manufacturing rose only 6 percent."

It is widely accepted that technology adds 1% to economic growth per year.

China's freight growth was 9.3%. I will add another 1% for technological improvement. The total freight goods value should increase by 10.3%.

China's construction sector comprises 6.6% of its economy. China's construction sector grew by 9% in current dollars in 2017.

($782.6 billion - $717.7 billion) / $717.7 billion = 9.04%

China's services sector grows by about 7.7% per year.
----------

Goods (49.5% - 6.6% = 42.9% of GDP): growing at 10.3%
Construction (6.6% of GDP): growing at 9%
Services (50.5 of GDP): growing at 7.7%

(42.9 x 1.103) + (6.6 x 1.09) + (50.5 x 1.077) = 47.3 + 7.2 + 54.4 = 108.9 (which is 8.9% economic growth for 2017)

My calculation shows that China's economy grew by 8.9% in 2017. I have no idea where the Chinese government came up with 6.9%.

 

[twocents]

Let's calculate China's 2017 economic growth rate.

China's economy comprises 49.5% (tangible) goods and 50.5% (intangible) services.

China Trumpets Its Service Economy | Bloomberg BusinessWeek (January 28, 2016)
"Jan 28, 2016 - Services grew 8.3 percent last year and for the first time generated more than half of gross domestic product, or 50.5 percent. Manufacturing rose only 6 percent."

It is widely accepted that technology adds 1% to economic growth per year.

China's freight growth was 9.3%. I will add another 1% for technological improvement. The total freight goods value should increase by 10.3%.

China's construction sector comprises 6.6% of its economy. China's construction sector grew by 9% in current dollars in 2017.

($782.6 billion - $717.7 billion) / $717.7 billion = 9.04%

China's services sector grows by about 7.7% per year.
----------

Goods (49.5% - 6.6% = 42.9% of GDP): growing at 10.3%
Construction (6.6% of GDP): growing at 9%
Services (50.5 of GDP): growing at 7.7%

(42.9 x 1.103) + (6.6 x 1.09) + (50.5 x 1.077) = 47.3 + 7.2 + 54.4 = 108.9 (which is 8.9% economic growth for 2017)

My calculation shows that China's economy grew by 8.9% in 2017. I have no idea where the Chinese government came up with 6.9%.

I don't know if China did or did not under report its economic growth for 2017. However I do know that in the early 2000s when China was overtaking EU countries China deliberately massaged its GDP numbers in order to surpass them one at a time rather several in one fell swoop

 

[AndrewJin]

China's economy can be broadly separated into two categories: hardware/goods (Huawei, Lenovo, Haier, Xiaomi, SANY, DJI, etc.) and software/services (Baidu, Alibaba, Tencent, etc.).

Regarding China's hardware economy, the Chinese freight growth boomed by 9.3% in 2017. See Xinhua citation below.

China's hardware economy has two components: quantity and quality. The quantity increased by 9.3%. However, we know that China's technology quality increases every year. For example, the Huawei phones shipped each year contain more powerful computer processors.

Thus, China's claim of 6.9% economic growth for 2017 could be conservative.

We know China's freight growth increased by 9.3% in 2017. We also know the average value of the products being shipped contains more advanced technology, which means the products are more valuable.

Combined, 9.3% freight growth + x% advanced technology growth = 10%+ "economic" growth in China's hardware economy

Yet, China is only claiming a 6.9% economic growth in its economy. There is a school of thought that says China is understating its real economic growth.
----------

China's freight growth steady in 2017 | Xinhua (January 31, 2018)

"China's railways, highways, waterways and civil airlines carried a total of 47.15 billion tonnes of cargo last year, up 9.3 percent from the 2016 level, according to data from the National Development and Reform Commission."

Many reports have already revealed how Chinese govement intentionally underestimates GDP, I guess you have already read that Broken Apparatus report.

Let's calculate China's 2017 economic growth rate.

China's economy comprises 49.5% (tangible) goods and 50.5% (intangible) services.

China Trumpets Its Service Economy | Bloomberg BusinessWeek (January 28, 2016)
"Jan 28, 2016 - Services grew 8.3 percent last year and for the first time generated more than half of gross domestic product, or 50.5 percent. Manufacturing rose only 6 percent."

It is widely accepted that technology adds 1% to economic growth per year.

China's freight growth was 9.3%. I will add another 1% for technological improvement. The total freight goods value should increase by 10.3%.

China's construction sector comprises 6.6% of its economy. China's construction sector grew by 9% in current dollars in 2017.

($782.6 billion - $717.7 billion) / $717.7 billion = 9.04%

China's services sector grows by about 7.7% per year.
----------

Goods (49.5% - 6.6% = 42.9% of GDP): growing at 10.3%
Construction (6.6% of GDP): growing at 9%
Services (50.5 of GDP): growing at 7.7%

(42.9 x 1.103) + (6.6 x 1.09) + (50.5 x 1.077) = 47.3 + 7.2 + 54.4 = 108.9 (which is 8.9% economic growth for 2017)

My calculation shows that China's economy grew by 8.9% in 2017. I have no idea where the Chinese government came up with 6.9%.

having a too big GDP does not serve China’s interests!

 

[Martian2]

Adjusting China's 2017 GDP for Inflation

When I made the calculation of China's 2017 GDP, inflation was accounted in the construction sector. According to the Export.gov chart, China's construction sector grew by 6.79% in real terms. After adding in inflation, the growth rate was 9%.

However, I did not adjust for inflation in calculating China's merchandise goods GDP.

Since GDP is normally expressed in current Yuans or Dollars, I have to factor in inflation. The inflation rate for China was 1.8% in 2017. Thus, I have to increase China's merchandise goods GDP by 1.8%.

China - Average consumer prices inflation rate | World Data Atlas
"In 2017, inflation rate for China was 1.8 %."

Regarding services, I do not know whether the citation from EuroMonitor International includes China's inflation or not. Therefore, I'll leave the 7.7% services growth as it is.

Goods (49.5% - 6.6% = 42.9% of GDP): growing at 10.3% + 1.8% inflation = 12.1% total
Construction (6.6% of GDP): growing at 9%
Services (50.5 of GDP): growing at 7.7%

(42.9 x 1.121) + (6.6 x 1.09) + (50.5 x 1.077) = 48.1 + 7.2 + 54.4 = 109.7 (which is 9.7% economic growth for 2017)

My inflation-adjusted calculation shows that China's economy grew by 9.7% in 2017.

In contrast, the Chinese government is claiming a 6.9% economic growth rate for 2017.

The difference between my calculated estimate of China's economic growth for 2017 and the Chinese government's official number is almost 3%. This raises the question: What if the Chinese government has been understating its GDP growth every year for the last ten years?

This issue is important, because I'm trying to explain the disconnect between China's official nominal GDP and the real-world data.

China consumed 34% more total energy than the US in 2016.
China consumed 44% more total electricity than the US in 2015.
China buys about 50% more cars than the US each year.
China buys more computers each year than the US.
China buys more smartphones each year than the US.
China buys more appliances each year than the US.

How is it possible that China's nominal GDP is smaller than the US?

Has the Chinese government understated its nominal GDP for years to create this paradox between real-world hard data and the GDP number?

 

[TaiShang]

China consumed 34% more total energy than the US in 2016.
China consumed 44% more total electricity than the US in 2015.
China buys about 50% more cars than the US each year.
China buys more computers each year than the US.
China buys more smartphones each year than the US.
China buys more appliances each year than the US.

How is it possible that China's nominal GDP is smaller than the US?

Has the Chinese government understated its nominal GDP for years to create this paradox between real-world hard data and the GDP number?

China knows one SP12 is enough for the world to bear with. Thus, it may be seen fit not to grow aggressively and leave all the shine and praise to others.

It is mentality: China cares first and foremost for the perception of its own people. Outside world can be fooled, but people at home cannot be fooled. They are functioning within the economy. So, it comes with almost zero cost for China to underestimate its economic growth while it offers several advantages, not the least leaves a strategic ambiguity by forcing others to play guess-game (both upwards and downwards).

 

[GS Zhou]

How is it possible that China's nominal GDP is smaller than the US?

Has the Chinese government understated its nominal GDP for years to create this paradox between real-world hard data and the GDP number?

It is actually about the data massage work that done by US.

The value-added by industry of the US could be found at:
https://www.bea.gov/iTable/iTable.cfm?ReqID=51&step=1#reqid=51&step=51&isuri=1&5114=a&5102=1

The corresponding China data is at:
http://www.stats.gov.cn/tjsj/ndsj/2017/indexch.htm
http://www.stats.gov.cn/tjsj/ndsj/2017/indexch.htm

Let's assume the exchange rate is 1 USD=6.6 RMB (2016 exchange rate)

Take a look at some sector-level GDP comparison.
1. Construction
China's construction sector GDP 2016 was 4952.2 billion RMB, or 750 billion USD.
US's construction sector GDP 2016 was 792.5 billion USD, BIGGER than the China construction sector.

Compared the real construction activities (be it houses, roads, bridges, tunnels, etc.) between the two countries, we could all understand how unrealistic that USA could have a bigger construction sector GDP than China.

2. Real estate
China's real estate sector GDP 2016 was 4813.3 billion RMB, or 729 billion USD.
US's real estate sector GDP 2016 was 2479 billion USD, almost 3.5x of the China number!!!

We've heard too much news about China's over-dependence on real estate; but compared to US, China's dependence is almost nothing mentionable!

3. Healthcare
China's Healthcare sector GDP 2015 was 1495.5 billion RMB, or 227 billion USD.
US's Healthcare sector GDP 2015 was 1349 billion USD, or 6x of the China number. Considering the population difference, US's per capita data could be 30x of the China per capita data. But the two countries have almost the same life expectancy.

I have to admire the "efficiency" of the US health care sector and its fascinating contribution to the USD GDP number.

4. Public services
China's GDP from this sector (Public Management, Social Security and Social Organization) 2015 was 2662 billion RMB, or 403 billion USD.

US's GDP from the sector of "Government", plus "Other services, except government" was 2816 billion USD, almost 5x of the China data!

Super efficiency of the US public service sector! Otherwise we can not find any reason to explain the 5x public service GDP from the US side. Congrats!

 

[TaiShang]

China's 2018 power usage to rise 5.5% on economic growth

CGTN
2018-02-02

China’s power consumption is expected to rise 5.5 percent in 2018 from the previous year, the China Electricity Council (CEC) said in a statement on Thursday, driven by economic growth and the ongoing coal-to-electricity conversion as part of Beijing’s air pollution campaign.

“Supplies will continue to be sufficient, but there are regional differences and power supplies in northern regions will be slightly tight,” the CEC said.

China has ordered millions of household and industrial plants in its smog-prone regions to replace their coal-fired heating equipment with natural gas- or electric-powered systems. The project, which has led to natural gas shortages this winter, will continue through 2018 to further curb air pollution.

/VCG Photo

The CEC expects a total of 120 gigawatts (GW) of new power capacity will be installed in 2018. Of which, 70 GW will come from non-fossil-fuel power plants.

It also forecasts China’s total installed power generation capacity will reach 1,900 GW by the end of 2018. With Beijing’s effort to promote clean energy, coal-fired power capacity will account for 53.6 percent of total power capacity, down 1.5 percentage points compared to 2017.

The world’s second-biggest economy aims to install 200 GW of power generation capacity, with 77 GW from clean energy sectors, by 2020.

 

[AndrewJin]

It is actually about the data massage work that done by US.

The value-added by industry of the US could be found at:
https://www.bea.gov/iTable/iTable.cfm?ReqID=51&step=1#reqid=51&step=51&isuri=1&5114=a&5102=1

The corresponding China data is at:
http://www.stats.gov.cn/tjsj/ndsj/2017/indexch.htm
http://www.stats.gov.cn/tjsj/ndsj/2017/indexch.htm

Let's assume the exchange rate is 1 USD=6.6 RMB (2016 exchange rate)

Take a look at some sector-level GDP comparison.
1. Construction
China's construction sector GDP 2016 was 4952.2 billion RMB, or 750 billion USD.
US's construction sector GDP 2016 was 792.5 billion USD, BIGGER than the China construction sector.

Compared the real construction activities (be it houses, roads, bridges, tunnels, etc.) between the two countries, we could all understand how unrealistic that USA could have a bigger construction sector GDP than China.

2. Real estate
China's real estate sector GDP 2016 was 4813.3 billion RMB, or 729 billion USD.
US's real estate sector GDP 2016 was 2479 billion USD, almost 3.5x of the China number!!!

We've heard too much news about China's over-dependence on real estate; but compared to US, China's dependence is almost nothing mentionable!

3. Healthcare
China's Healthcare sector GDP 2015 was 1495.5 billion RMB, or 227 billion USD.
US's Healthcare sector GDP 2015 was 1349 billion USD, or 6x of the China number. Considering the population difference, US's per capita data could be 30x of the China per capita data. But the two countries have almost the same life expectancy.

I have to admire the "efficiency" of the US health care sector and its fascinating contribution to the USD GDP number.

4. Public services
China's GDP from this sector (Public Management, Social Security and Social Organization) 2015 was 2662 billion RMB, or 403 billion USD.

US's GDP from the sector of "Government", plus "Other services, except government" was 2816 billion USD, almost 5x of the China data!

Super efficiency of the US public service sector! Otherwise we can not find any reason to explain the 5x public service GDP from the US side. Congrats!

wow, this is some very interesting comparison!

 

[GS Zhou]

wow, this is some very interesting comparison!

yes. The more you look at the by-industry value added of the US, the more clear that its GDP is horribly overestimated (with the China standard)

 

[Huan]

Adjusting China's 2017 GDP for Inflation

When I made the calculation of China's 2017 GDP, inflation was accounted in the construction sector. According to the Export.gov chart, China's construction sector grew by 6.79% in real terms. After adding in inflation, the growth rate was 9%.

However, I did not adjust for inflation in calculating China's merchandise goods GDP.

Since GDP is normally expressed in current Yuans or Dollars, I have to factor in inflation. The inflation rate for China was 1.8% in 2017. Thus, I have to increase China's merchandise goods GDP by 1.8%.

China - Average consumer prices inflation rate | World Data Atlas
"In 2017, inflation rate for China was 1.8 %."

Regarding services, I do not know whether the citation from EuroMonitor International includes China's inflation or not. Therefore, I'll leave the 7.7% services growth as it is.

Goods (49.5% - 6.6% = 42.9% of GDP): growing at 10.3% + 1.8% inflation = 12.1% total
Construction (6.6% of GDP): growing at 9%
Services (50.5 of GDP): growing at 7.7%

(42.9 x 1.121) + (6.6 x 1.09) + (50.5 x 1.077) = 48.1 + 7.2 + 54.4 = 109.7 (which is 9.7% economic growth for 2017)

My inflation-adjusted calculation shows that China's economy grew by 9.7% in 2017.

In contrast, the Chinese government is claiming a 6.9% economic growth rate for 2017.

The difference between my calculated estimate of China's economic growth for 2017 and the Chinese government's official number is almost 3%. This raises the question: What if the Chinese government has been understating its GDP growth every year for the last ten years?

This issue is important, because I'm trying to explain the disconnect between China's official nominal GDP and the real-world data.

China consumed 34% more total energy than the US in 2016.
China consumed 44% more total electricity than the US in 2015.
China buys about 50% more cars than the US each year.
China buys more computers each year than the US.
China buys more smartphones each year than the US.
China buys more appliances each year than the US.

How is it possible that China's nominal GDP is smaller than the US?

Has the Chinese government understated its nominal GDP for years to create this paradox between real-world hard data and the GDP number?

I rue the day when some international entity will issue a brutal report claiming the United States has overcalculated its GDP size by 40-50% per year. It will be embarrassing.

 

[AndrewJin]

yes. The more you look at the by-industry value added of the US, the more clear that its GDP is horribly overestimated (with the China standard)

Same supa powan style....