Economists refute media reports claiming China’s GDP will surpass US in Q2, citing wrong calculation methods

By Ni Hao Source: Global Times Published: 2020/7/16 18:31:13

Chinese economists have refuted online reports stating China's GDP in the second quarter this year is set to overtake the US for the first time, noting that someone has used the wrong calculation methods and the US' total economic volume will still be significantly higher than China even with an expected contraction.

Data released by the National Bureau of Statistics on Thursday showed that China's GDP increased by 3.2 percent year-on-year in the second quarter. The US has not yet released GDP data for the second quarter. Earlier, Goldman Sachs forecasted a substantial decline of 39 percent year-on-year and the Federal Reserve Bank of Atlanta even predicted a 53 percent decline.

A consumer buys vegetables at a supermarket in Taiyuan, North China's Shanxi Province on Tuesday. China's consumer price index (CPI), a main gauge of inflation, rose 3.3 percent year-on-year in April, down 1.0 percentage points from March, the NBS said on Tuesday. Photo: cnsphoto

According to some online media reports, given that US GDP could decline by 38 percent in the second quarter this year, US GDP in the second quarter may be as low as $3.32 trillion. Meanwhile, China's GDP in the second quarter of 2019 was 23.75 trillion yuan (about $3.39 trillion), as long as China's GDP can maintain positive growth in the second quarter this year, its total GDP volume in the second quarter of this year could exceed the US.

Nevertheless, experts noted the calculation method of the quarterly GDP of the US is quite different from that of China. The quarterly GDP growth rate of the US is a quarter-on-quarter concept. Thus, the year-on-year decline of the US' GDP in the second quarter should be less than 10 percent and total economic volume will be still significantly higher than China.

US market agencies' predictions of US economic growth in the second quarter are a quarter-to-quarter concept, and "people who are doing the calculations have not made clear the conception before publish it online," Zhu Baoliang, chief economist of the State Information Center, told Global Times.

According to the Shanghai-based independent research institute Monita, China and the US use different methods when publishing GDP data. China is used to publishing year-on-year GDP data, and the US is used to publishing quarter-on-quarter annual rates after seasonally adjusted data. The current annual rate of overseas economic forecasts for the US refers to the probability of "annual ratio" rather than the concept of "year-on-year". 

Therefore, the year-on-year growth rate of US real GDP in the second quarter of 2020 should be around -10 percent. Although it has reached its lowest value since 1929, it is definitely not as exaggerated as the -30 percent year-on-year.

Based on a 10 percent contraction, US GDP in the second quarter remained at around $4.8 trillion, still higher than China's GDP data for the second quarter.

In addition, an unnamed expert said that China's GDP in terms of the purchasing power parity system had already surpassed that of the US in 2014, so it is now meaningless to speculate that China's GDP in the second quarter exceeded that of the US, and China is still a developing country.


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