Chinas economy, the worlds second largest, is not as big as was thought, says a report by the World Bank claiming that previous calculations have overestimated the size of Chinas economy by about 40 per cent, BBC online reports Monday
The revelation came after the bank updated the way it calculated the huge countrys gross domestic product (GDP). The bank said the findings meant China would not become the world’ biggest economy in 2012 as forecast.
It also meant China was poorer than estimated. This in turn would influence future aid and investment plans, the World Bank said. China gains extra aid from international institutions and has asked for help in climate change talks because of its status as a developing country.
Based on the World Banks new research, Chinas economy is now worth some 5,33 trillion US dollar. USA, at 12 trillion dollar, is the worlds largest economy.
The method used for the calculations is called “purchasing power parity” (måling af realkøbekraft), and corrects for differences in prices, which are lower in China than in Western countries, for the same goods.
However, the figures show that average incomes in China are still just 10 per cent of those in the US. China averages 4.091 dollar per person, while average income in the US is 41.000.
Based on current exchange rates, Chinas economy is only half as big, at 2,24 trillion dollar.
In previous years, economists have tried to adjust their figures to take into account local prices in developing nations because they were often significantly lower than those in more industrialised countries.
However, the bank said that many of the prices which were being used were out of date and gave distorted GDP figures. This time it has used updated prices to create more accurate figures.
In Africa, the main drivers of growth were South Africa, Egypt, Nigeria, Morocco and Sudan, which accounted for almost two-thirds of the continents output.
