China says new housing metrics behind upward revision to 2023 GDP

2:28 am Friday, December 27th, 2024

BEIJING (Reuters) – China said on Friday its 2023 gross domestic product was revised upward due in part to changes in housing sector calculation methods, which would also affect the size of the economy in 2024 but have little impact on the growth rate.

On Thursday, China’s 2023 GDP was raised by 3.4 trillion yuan, or 2.7%, to 129.4 trillion yuan ($17.73 trillion), according to the National Bureau of Statistics (NBS), which did not initially provide an explanation for the change.

The bureau said on Friday it had switched to using rental values instead of the previous housing cost calculation method, which resulted in an increase of 1.34 trillion yuan in housing services’ contribution to the economy in 2023.

In the past, housing rental data was incomplete due to China’s immature rental market, so a “housing cost method” was used to calculate housing service output, NBS said in a statement.

Under the housing cost method, the total value of a property decreases over time due to depreciation, maintenance costs, property management fees and property taxes.

“In general, the current year’s GDP revision affects the following year’s GDP size, but basically does not affect its growth rate,” the bureau said.

Tertiary industries’ share of economic output rose to 56.3% in 2023 after the revision, an increase of 1.7 percentage points from the preliminary data, and also contributed to the increase in the size of the GDP, according to the statement.

Tertiary industries usually range from retail to transport, catering, accommodation, finance and property.

China’s economy has stuttered this year due to a prolonged property crisis, massive local government debt and fragile consumer demand.

At an agenda-setting meeting this month, Chinese leaders pledged to increase the budget deficit, issue more debt and loosen monetary policy to support economic growth next year in expectation of more trade tensions with the U.S. when President-elect Donald Trump takes office in January.

The authorities have agreed to issue 3 trillion yuan of special treasury bonds next year, which would be the highest on record, according to a Reuters report this week.

($1 = 7.2982 Chinese yuan renminbi)

(Reporting by Liangping Gao and Kevin Yao; Editing by Jamie Freed)