China has revised the size of the economy last year, saying gross domestic product (GDP) was 16.8 per cent higher than previously reported mainly because the service sector was not fully taken into account.

The country raised the GDP in 2004 to 15.99 trillion yuan (US$1.93 trillion) from 13.65 trillion (US$1.64 trillion) based on the results of the country's first nationwide economic census.

The revision lifts China above Italy as the sixth-biggest economy in the world last year. The top five are the United States, Japan, Germany, France and the United Kingdom.

Li Deshui, commissioner of the National Bureau of Statistics, said yesterday that services accounted for 93 per cent of the revision.

The sector's output was revised to 6.5 trillion yuan (US$785 billion) from the previous estimate of 4.4 trillion yuan (US$531.4 billion).

The government will not change its macro-economic policies, he said, adding the previous data basically reflect the overall level and trend of the country's social and economic development.

The government will also not change its foreign-exchange regime just because the country's aggregated size of GDP increased, he said.

After the number-crunching, the ratio of the service sector to GDP in 2004 rose from 31.9 per cent to 40.7 per cent.

The ratio of manufacturing and construction fell to 46.2 per cent from 52.9 per cent; and the share of agriculture shrank to 13.1 per cent from 15.2 per cent.

The economic census helped identify service activities that were not covered before, so the structure of the three sectors is more in tune with the ground reality and in line with the general level of developing countries, Li said.

The government would revise annual GDP growth rates back to 1993 in light of the results from the census, he said.

"Although the aggregated size of China's GDP increased 16.8 per cent, and its economic rankings moved ahead a little, the country still ranks below the top 100 in economic output per person," Li said. "Per capita GDP in China accounted for only about one-fifth of the world's average."

The revision did not change China's status as the world's largest developing country, he added. "We cannot forget China still has more than 100 million people in poverty."

Zhuang Jian, a senior economist with the Asian Development Bank's Resident Mission in China, said the revisions paint a more accurate picture of the economy.

"The ratio of investment and consumption to GDP have thus become more reasonable and healthy," he told China Daily.

Bert Hofman, chief of the economics unit of the World Bank Office in Beijing, said the data provide better information on the current status of the economy as well as on structural issues such as sectoral shares in the economy.

"The new data are very timely," he said, "as many policy issues that the government wants to tackle in the forthcoming 11th Five-Year Plan (2006-10) need reliable data."

Hofman noted that some of the policies drawn up based on previous numbers, such as investment to GDP and services to GDP, could change in light of the new figures.

It is not uncommon that countries with rapid growth regularly see major revisions in their GDP, the World Bank pointed out.

Among the recent examples are Indonesia, where a 2004 revision resulted in a 17 per cent increase in GDP; Italy, where a 1987 revision showed an increase in 1982 of more than 17 per cent; and Norway, where a 1995 revision resulted in an increase of some 11 per cent in measured GDP.

Source: China Daily