CHINA KEEPS RAKING IT IN

The FT reports, via (PRC) China's Ministry of Commerce, that FDI inflows to the mainland totalled $25.91 billion in the first five months of 2004 (or an annualized rate of $62.2 bn, ignoring seasonal factors).

I'm a little unclear on where they found this press release. It seems from the english version of the MofCom site that the most current statistical release on FDI is for the first five months of 2003, not 2004. (Sorry, my zhongwen is quite not yet up to the level of navigating Chinese economic statistics). The closest thing I found was a number for $19.62 bn, Jan-April. In the same period last year, FT reports, China attracted $23.27 bn, and the MofCom reports $53.5 bn for 2003. Compare this with inflows of $82 bn for the US in 2003.

There's a big question whether these data are directly comparable--and questions on the integrity of the Chinese numbers. In 2002, a major (in China) scandal erupted when it was discovered that provincial authorities were all cooking their GDP numbers. Looking at a part-year cut in the Chinese numbers is problematic given that China does not subscribe to the IMF's statistical data disemanation standards (SDDS), and China only reports balance of payments data on an annual basis. How accurate can China's numbers for Jan-April '04 or Jan-May '04 be given that the US Bureau of Economic Analysis will not even release its Jan-Mar '04 numbers until this Friday morning (June 18th)?

Regardless of the precision of such data, the relative magnitudes of the FDI inflows is jaw-dropping enough. With US GDP currently running at $11.5 trillion (2004Q1, annualized rate) and China's GDP running at $1.76 trillion (at market rate*), it doesn't take an econometrician to see that China is coming up fast on the United State's economic prowess.



*Given that China actively undervalues its currency to gain competitive advantage in international trade, market rates likely understate China's $-denominated GDP. Therefore, many analysts prefer to assess China's GDP in terms of purchasing power parity (PPP). Viewed this way, China's economy is gigundo, and on track to surpass the US economy by 2015.