China revises up 2008 growth to 9.6 per cent - Service sector more productive than thought

China revises up 2008 growth to 9.6 per cent - Service sector more productive than thought
© Reuters Limited
Decdember 25, 2009
http://www.ft.com/cms/s/0/bcd45022-f116-11de-bcfc-00144feab49a.html

BEIJING, Dec 25 - China on Friday revised up its 2008 growth rate to 9.6 per cent, taking it well above the originally reported 9.0 per cent after calculating that the service sector had been more productive than previously thought.

The upward revision underscored that China was well on track to surpass Japan as the world’s second-largest economy in 2010, if not sooner, and has burnt through less energy to deliver each additional ounce of growth.

China’s economy grew at 7.7 per cent in the first three quarters of 2009 compared with the same period a year ago. Peng Zhilong of the National Bureau of Statistics said the government would likely revise up growth figures reported thus far this year.

The hidden strength found in China’s services sector was a modicum of good news for policymakers in China and abroad, who have said that promoting the development of the country’s non-tradeable sector is a key ingredient in rebalancing the global economy.

But it was still far from mission accomplished on that front.

China’s services sector accounted for 41.8 per cent of gross domestic product last year, up from the previously reported 40.1 per cent. In developed economies, services often contribute more than 70 per cent of GDP.

”China always finds it hard to get accurate statistics about the services sector, and the upward revision is not a surprise,” Zhang Xiaojing, a researcher with the Chinese Academy of Social Sciences (CASS), said. ”But we cannot say China’s economic structure is reasonable simply because of that.”

The revisions were also unlikely to have much, if any, impact on the country’s current policy stance. The government has already begun to rein in its ultra-loose pro-growth measures adopted in the face of the global financial crisis.

Mr Zhang of CASS said the overall picture of a sharp slowdown late last year and a strong recovery this year was still intact.

China’s central bank earlier this week reaffirmed its long-standing commitment to maintain an ”appropriately loose” monetary policy. The government this week also pledged to deliver the second half of its promised two-year Rmb4,000bn ($585bn) stimulus package in 2010.

Yet beneath this headline stability, Beijing has started to wind down some parts of its stimulus.

Over the past month, it has scaled back a tax exemption on property sales, increased a tax on automobile purchases, vowed to crack down on speculation in the sizzling housing market and outlined how it will more strictly control bank lending.

The revisions also showed that China has made more progress towards its goal of cutting energy intensity, or the amount of energy it uses to produce each dollar of national income.

The country used 5.2 per cent less energy per GDP unit in 2008, a bigger drop than the previously reported 4.6 per cent fall, the statistics bureau said.

The country set a goal of cutting energy intensity by 20 per cent over the five years to 2010, even as overall energy consumption continues to rise.

Originally presented as part of a drive to reduce reliance on overseas oil and gas and to curb damaging pollution, in recent years the efficiency target has also been promoted as a key part of efforts to curb growth in greenhouse emissions.

China is under pressure as the highest annual emitter of the gasses that cause global warming. It has faced a firestorm of international criticism after climate negotiations in Copenhagen ended last week with a broad, non-binding accord that fell short of hopes for a robust global agreement on how to curb emissions.

Beijing says that its emissions per capita and over the course of history are lower than those of rich nations that went through long, dirty periods of industrialisation.

The GDP and energy intensity revisions reflected the results of China’s second national economic census, completed earlier this year.

The first census, conducted in 2005, resulted in revisions to growth rates from 1993 to 2004. Mr Peng, the statistician, said China was still working on revising figures for 2005 through 2007.