Chinese much richer than they thought

BEIJING - China revised the size of its economy by 16.8 per cent yesterday - a move economists say makes it the fourth-largest economy in the world.

The National Bureau of Statistics, in its first nationwide economic census, said estimated gross domestic product in 2004 totalled 15.99 trillion yuan ($2.88 trillion), an increase of 2.3 trillion yuan or 16.8 per cent. Previously it had put GDP at 13.65 trillion yuan.

The revision was largely the result of better collection of data for the services sector and small enterprises, whose activity has been under-reported until now.

The bureau said the tertiary, or services, sector accounted for 93 per cent of the revision and now made up 40.7 per cent of the economy instead of 31.9 per cent previously.

The share of the secondary, or industry, sector in GDP fell to 46.2 per cent from 52.9 per cent and that of the primary, or agricultural, sector, to 13.1 per cent from 15.2 per cent.

According to World Bank rankings, this GDP would have lifted China above Italy into sixth place in the world economic rankings.

But based on exchange rate trends and relative growth rates in 2005, economists calculate that China by now has risen to fourth place, ahead of France and Britain, and is now dwarfed only by the United States, Japan and Germany.

Nearly 10 million census-takers fanned out across China to get a comprehensive picture of the economy and found millions of companies previously unaccounted for, with combined output valued at about $414 billion in 2004.

The census, which would add the equivalent of Austria's annual output to the world's fastest-growing big economy, may add to US and European efforts to convince China to let its currency appreciate.

"The fact that China will come out of this as presumably a much richer country will certainly invoke more political pressure" to let the currency gain, said Jim Walker, chief economist at CLSA Emerging Markets in Hong Kong.

By revising up estimates of national wealth, China would open itself to the argument that its economy could handle a more freely traded currency, economists said.

Unearthing wealth

* The economic census is the country's first.

* Nearly 10 million census-takers were involved.

* They found millions of companies previously unaccounted for.

* Those companies had a combined output of about $414 billion in 2004.

- REUTERS, BLOOMBERG