Comment 40A: GDP Implicit Price Deflator of China (Feb. 28, 2007, data updated up to Quarter 1 of 2007 on April 19, 2007)

After pointing out the dramatic deviation between China's Consumer Price Index (CPI) and the GDP implicit price deflator (calculated) since the 4th quarter of 2005 in Comment 40, a new report about China's economy in 2006 has been released on Feb. 28, 2007 by National Bureau of Statistics of China (in Chinese), containing yearly revisions of nominal GDP back to 2002. The revisions are substantial in earlier years and have allowed the recalculation of GDP implicit price deflators back to year 2003. The results are listed in the following Tables with newly issued or revised numbers written in blue. This table will be periodically updated.

The revised numbers on GDP implicit price deflator have removed the dramatic divergence from CPI numbers since the 4th quarter of 2005. The inflation rates indicated by GDP implicit price deflators are roughly twice of those of CPI, but the trend that the inflation rate is falling since 2004 at the period of rapidly rising crude oil price is reinforced. This is an abnormal phenomena when most of other economies are suffering from higher inflation rates due to the pressure of rising oil prices. If those inflation numbers are believable, we must conclude that at its very early developement stage China is already encountering the deflational trend experienced by Japan, another perennial trade surplus country. This observation is at odds with Chinese Government's efforts to cool the economic growth from the fear of run away inflation.

In 2006 China has expanded the base of counting GDP by including more aggressively the sales of private individual businesses like street vendors. However, National Bureau of Statistics of China only gives the revised GDP data of the whole year, under the title of Q4, for 2005 and earlier years, but not the data in Q1, Q2 and Q3. Therefore, the nominal GDP in Q1 to Q3 for the years 2005 and earlier are values of the old compilation. This makes GDP implicit price deflator of Q1, Q2 and Q3 in 2005 meaningless. Also we should note that all the results under the categories of Q1 to Q3 are based on preliminary results; the bureau has not published revised data for those quarters.

Year Nominal GDP in billion Yuans Real GDP % change from same period prior year
Q1 Q2 Q3 Q4 Q4 Q1 Q2 Q3 Q4
2007 5,029 -- -- -- - - - +11.1 -- -- --
2006 4,331 9,144 14,148 20,941 - - - +10.2 +10.9 +10.7 +10.7
2005 3,132 6,742 10,628 18,387 - - - +9.5 +9.5 +9.4 +10.4
2004 2,713 5,879 9,314 15,988 13,688 +9.8 +9.7 +9.5 +10.1
2003 2,356 5,005 7,911 13,582 11,739 +9.9 +8.2 +8.5 +10.0
2002 2,102 4,554 7,168 12,033 10,517 +7.6 +7.8 +7.9 +9.1
2001 - - - - - - - - - - - - 9,731 - - - - - - - - - - - -
2000 - - - - - - - - - - - - 8,947 - - - - - - - - - - - -
1999 - - - - - - - - - - - - 8,207 - - - - - - - - - - - -
1998 - - - - - - - - - - - - 7,835 - - - - - - - - - - - -
Black numbers are obtained from the website of National Bureau of Statisttics of China and the red numbers are obtained from the website of allcountries.org, the data on which are derived from CIA's data bases. Q1,..., Q4 refer to Quarter 1, ... ,4. The data under those categories are cumulative. For example, a GDP number under Q4 is the sum of Q1 to Q4, thus equivalent to the number of the whole year. A number under Q4 of the category of Real GDP % change is the % change of the whole year.


The calculated results of the growth rate (expressed in %) of GDP implicit price deflators are shown in the following table along with CPI data provided by the data bases.

Year GDPdeflator % change from prior year CPI % change from prior year
Q1 Q2 Q3 Q4 Jan. to Nov. Jan. to Dec.
2007 +4.5 -- -- -- -- --
2006 -- -- -- +2.9 +1.3 +1.8
2005 +5.4 +4.7 +4.3 +4.2 +1.8 +1.8
2004 +4.9 +7.1 +7.5 +6.9 +4.0 +3.9
2003 +2.0 +1.6 +1.7 +2.6 +1.0 +1.2
2002 - - - - - - - - - - - - -0.8 -0.8
2001 - - - - - - - - - - - - - - - +0.7
2000 - - - - - - - - - - - - - - - +0.4
1999 - - - - - - - - - - - - - - - -1.4
1998 - - - - - - - - - - - - - - - -0.8
1997 - - - - - - - - - - - - - - - +2.8
1996 - - - - - - - - - - - - - - - +8.3
1995 - - - - - - - - - - - - - - - +17.1
1994 - - - - - - - - - - - - - - - +24.1
Numbers under GDPdeflator are derived from the data on the website of National Bureau of Statisttics of China. The black numbers under CPI are obtained from the web site of National Bureau of Statistics of China, and the red numbers are obtained from the website of allcountries.org, the data on which are derived from CIA's data bases. Q1,..., Q4 refer to Quarter 1, ... ,4. The data under those categories are cumulative. For example, a GDPdeflator % change number under Q4 is the average of Q1 to Q4, thus equivalent to the number of the whole year.