China Raises GDP Growth Estimates, Narrowing Gap With Japan

Dec. 25 (Bloomberg) -- China raised its 2008 growth estimate to 9.6 percent from 9 percent and said this year’s quarterly figures will increase, narrowing the gap with Japan, the world’s second-biggest economy.

Gross domestic product was 31.405 trillion yuan ($4.6 trillion) last year, the statistics bureau said at a briefing in Beijing today. That compares with a previous 30.067 trillion yuan and the World Bank’s estimate of $4.9 trillion for Japan.

China’s expansion will be more than 8 percent in 2009, according to government officials, and the nation is poised to overtake Japan next year, International Monetary Fund projections show. Today’s figures result from an economic census which showed a bigger contribution from services and continue a pattern of China revising up preliminary growth estimates.

“The big underlying factor propelling China’s growth is the continued migration of people from the agricultural sector to the more modern economy -- industry and services,” said David Cohen, an economist at Action Economic in Singapore. “There’s no stopping China.”

For 2009, revisions will mainly affect the value of the year’s gross domestic product, with a “very small” impact on the growth rate, said Peng Zhilong, the head of the bureau’s national economy calculation department.

China’s expansion in 2008 compares with U.S. growth of less than 1 percent. Japan’s gross domestic product shrank 1.2 percent. The Indian economy expanded 6.7 percent in the fiscal year ended March 2009.

‘Loose’ Monetary Policy

This year, the Chinese economy grew 8.9 percent in the third quarter from a year earlier, 7.9 percent in the second and 6.1 percent in the first. The government has pledged to maintain a “moderately loose” monetary policy in 2010 to sustain a rebound driven by a stimulus package and record lending.

The pace of growth is attracting more investment. Foreign direct investment climbed 32 percent in November to $7 billion from a year earlier. Luxury carmaker Bayerische Motoren Werke AG said last month that it will build a new factory worth 5 billion yuan in China to tap an auto market set to overtake the U.S. as the world’s largest.

“Investors are anxious to participate in what remains, with India, the biggest story that’s out there,” Action Economics’ Cohen said.

Today’s figures showed a 13.1 trillion yuan contribution from services in 2008, compared with 12 trillion yuan previously. The census, intended to give a better picture of the economy’s make-up, focused on industry and services rather than agriculture.

More Revisions Pending

Gross domestic product figures for 2005, 2006 and 2007 will also be revised as a result of the census, Peng said.

China’s economy was 4.4 percent bigger in 2008 than originally estimated, today’s figures showed. In comparison, a previous census in 2005 showed the statistics bureau had under- estimated the size of the 2004 economy by 17 percent.

Besides the census, China routinely carries out a first and second check of each set of annual figures for gross domestic product, issuing revisions where necessary.

In April last year, the bureau raised the growth figure for 2007 to 11.9 percent from 11.4 percent, citing larger estimates for the contribution from service industries such as telecommunications and retailing. In January this year, it raised the estimate again to 13 percent.

“Upward revisions of China’s GDP numbers are frequent, large and well expected, so we expect little market impact from today’s revision,” Lu Ting, a Hong Kong-based economist for Bank of America-Merrill Lynch said.

Energy Consumption

China also revised energy consumption per unit of economic output in 2008, officials led by chief statistician Ma Jiantang said at today’s briefing.

The measure showed a drop of 5.2 percent compared with an earlier estimate of a 4.59 percent decline. The statisticians revised up energy consumption for the year by 2.12 percent to the equivalent of 2.91 billion tonnes of standard coal.

Before this month’s talks in Copenhagen on climate change, China announced a target of cutting its 2005 levels of carbon dioxide emissions per unit of GDP by between 40 percent and 45 percent by 2020.

Today’s figures suggest “it should be a reasonable goal,” Merrill’s Lu said.