China's 2023 GDP Revision

BEIJING (Reuters) – China announced on Friday an upward revision of its 2023 gross domestic product (GDP), partially due to changes in how the housing sector is calculated. This revision will also influence the 2024 economic size but is not expected to impact the growth rate significantly.

On Thursday, the National Bureau of Statistics (NBS) revealed that the GDP for 2023 had been raised by 3.4 trillion yuan, or 2.7%, bringing the total to 129.4 trillion yuan ($17.73 trillion). Initially, no explanation was provided for this adjustment.

The NBS explained that it shifted from using housing cost methods to assessing rental values, which led to an increase of 1.34 trillion yuan in the housing services contribution to the economy for 2023. Previously, the rental data was limited because of an immature rental market in China, making a housing cost method necessary for calculating housing service output.

Under the housing cost method, the total value of properties depreciated over time due to maintenance costs, property management fees, and taxes, affecting overall calculations.

The bureau stated that while the current year's GDP revision modifies the next year's GDP size, it typically does not alter the growth rate. Following the revision, the tertiary industries' share of economic output rose to 56.3% in 2023, which is an increase of 1.7 percentage points from earlier figures. These industries include retail, transport, catering, accommodation, finance, and property.

China's economy has struggled this year, facing challenges such as an ongoing property crisis, significant local government debt, and weak consumer demand. In response, Chinese leaders have pledged to increase the budget deficit, issue more debt, and ease monetary policy to support economic growth in anticipation of heightened trade tensions with the U.S. as Donald Trump prepares to take office in January.

Authorities plan to issue 3 trillion yuan in special treasury bonds next year, marking the highest issuance on record, according to a recent Reuters report.

($1 = 7.2982 Chinese yuan renminbi)