China’s GDP Accounting System and Its Major Loopholes

Both economists and the general public have long been evaluating the level of economic development of the world’s economic miracle – China – by its GDP. Officially published GDP statistics are in the scope of the country’s official statistical institution. However, the quality and reliability of the statistics vary based on the way the institution operates and what methods it uses. The thesis summarizes the most important information we have about the Chinese GDP accounting system and highlights the red flags that have been raised about the reliability of the Chinese GDP in the past 20 years. The thesis presents the knowledge we have about the system and points out the areas where we considerably lack information. A separate chapter is dedicated to the proven inaccuracies, especially the striking differences between local sums and aggregate GDP data. This summary of what we do and do not know helps better interpret the Chinese official statistics and is a useful tool when analyzing them.