Can you calculate the GDP? What counts beyond the GDP?
In the People’s Republic of China, the GDP in billion (b) Rmb at current prices was 67.9b in
1952. In 1960, right after the "Great Leap Forward", reported numbers stood at 145.7b,
and then fell to 122b in 1961. Seventeen years later, in 1977, just before the beginning of “Gaige
Kaifang”, the Economic Reform and Opening Policy, it had risen to 320b. The GDP at current
prices stood at 8,946.8b in 2000.
The nominal GDP per head was 119 Yuan Renminbi (Y) in 1952. It climbed up to Y218 in 1960. In
1961 it had fallen to Y185. In 1977, the nominal GDP per head was Y339.
From then on twenty-two years later, in 2000, nominal per capita GDP was Y16,000.
The GDP Index in real terms stood at 100 points in 1952. 1960 it was at 205points; in 1961 it fell to 149 points.
In 1977 it had changed to 422 points. In 2000, the real GDP Index stood at 3,422 points.
For the Consumer Price Index (CPI), we have values from 1977 on, with the base year 1977 given the index value of
100. The CPI in 2003 has a value of 352.0 points. In 2004 it is at 356.5 points.
During the time from 1949 to 1977 China was famous for being one of the most equal countries in terms of income
distribution in the world. From 1978 on this trend reversed, and the number typically used to measure income
(in)equality, the Gini-coefficient, surpassing the as critical regarded 40%-mark around 2000, indicating an
increasing gap between less and more well-off citizens.
Questions:
I.Between 1952 and 2000, the nominal GDP per head rose nearly 135-fold. Does this mean the Chinese people in
2000 can buy 135times more goods and services than sixty years ago?
Answer: No, these are nominal and total income figures. As they are not real, inflation is not taken into account.
And as they are not per capita, changes in population are not taken into account.
II.For the whole Chinese economy, how did the total GDP develop relatively in real terms from a) 1952 to 1977, b)
1952 to 2000? Answer: The real GDP of the Chinese economy increased around four-fold
until 1977. In 2000 it was 34-times as big as in 1952.
III.Thinking about your grandparents’ generation, can you extract from the text, how high
the GDP per head in real terms was when your grandparents were working (1977)?
And how about the real GDP per head in our days (2003)?
Answer: Formula: Real GDP= (GDPnom of year measured / Price index of
year measured) x 100
1977: (Y339 / 100) x 100 = Y339 ; 2003: (Y10,542/ 352) x 100 = Y3,000
IV.What do these numbers tell you about the development of China in
wider terms? Except from the economic development, can you conclude
to the wider development, the welfare of the country and the welfare of
single citizens? Would you like to get any additional statistical material?
Answer: e.g. income fairly evenly spread; medical services for everybody;
choice in education, choice in work,..
V. Is it all about producing more, earning more?
Sources: http://www.chinability.com/Prices.htm , http://www.chinability.com/GDP.htm