Understanding Chinese GDP by Xuguang Song

Author:Xuguang Song
Language: eng
Format: epub, pdf
ISBN: 9789813297333
Publisher: Springer Singapore

2012

519,470.10

518,214.75

−1255.35

−0.24

964.40

−3624.45

Data Source GDP and GNI data are from China Statistical Yearbook. The employee compensation and investment income data are from the international balance sheet of China

Between 1982 and 1994, the differences between GDP and GNI were as little as less than 10 billion yuan. Furthermore, the proportions of the differences in the GDPs were less than 0.6%. The differences in only 3 years among the 11 years were negative. In other words, the GNIs were less than GDPs in three years and were greater than GDPs in the remaining years. In this period, the factor income showed a small amount of net capital inflow of investment income. Considering the absence of data on employee remuneration until 1997, the difference in data in this period depended entirely on the change in the investment income difference.

Between 1995 and 2005, the factor incomes paid to abroad were greater than those obtained from abroad due to the gradual increase of foreign capital in domestic production and the smaller scale of investment abroad. Thus, GNIs were consistently less than GDPs, with the difference between 40 billion yuan and 160 billion yuan. The proportions of the differences in GDPs each year were mostly over 1.0%. The proportion was the highest in 1998 at 1.63%. In this period, a large amount of investment income flowed out.

Since 2006, the implementation of the strategy of “going out” and the cancellation of the preferential treatment in attracting foreign investment caused a significant increase in investment abroad. Consequently, the differences between GDPs and GNIs, including the proportions of the differences in GDPs each year significantly decreased from 1 to 0.2%. In 2007 and 2008, GNIs were even greater than GDPs. However, in the past two years, the absolute values of the differences between GNIs and GDPs showed a tendency to recover.

The difference between GNI and GDP is further decomposed into the labor income difference and the investment income difference. As shown in Fig. 8.1, the employee remuneration difference transitioned from net outflow to net inflow. It changed from negative to positive in 2003, while showing a trend of continuous growth. The investment income difference had always showed the state of the net outflow, except in 2007 and 2008. The investment income difference was larger than the employee remuneration difference.

Fig. 8.1Trends of differences between GNI and GDP in the current account balance, the employee compensation, and the investment income from 1982 to 2012

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