Is China's GNP Number Accurate

by James Luko -  Nolan Chart

Of course not. Currently, in real dollars at today's exchange rate average ($/RMB) China's Gross National Product is estimated at between 4.125  4.350 Trillion USD. That's a pretty big economy, it would equal it to Japan or even surpass it making it the second largest economy in the world. It however still pales behind America's 13.5-14 Trillion dollar economy (inclusive of the current recession).

Is the Chinese GNP number accurate ? Of course it cannot not be very accurate since the numbers depend on data submitted by domestic sources- mainly, SOE's, State Owned Enterprises.

SOE's still represent approximately 2/3'rds of the Chinese economy, which makes the overall GNP number highly dependent on the accuracy of data submitted by SOE's. SOE's over the past 20 years have had a great incentive to "cook the books" by submitting "fuzzy math" accounting. By western accounting principles a great number of Chinese SOE's are technically bankrupt. (This is mainly because special subsidies, labor and other costs are NOT included in calculating net profit, assets, etc) .

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