China's 2005 growth rate lifted to 9.8 percent

updated 8:48 a.m. ET Jan. 3, 2006

SHANGHAI, China - China’s economy grew by an unexpectedly strong 9.8 percent in 2005, as a new survey showed that authorities had previously underestimated the economy’s size, the official Xinhua News Agency said Tuesday.

The new figure, up from original estimates of 9.4 percent, accounts for the results of a national economic survey released in December, Xinhua said. The Xinhua report cited remarks made Sunday by National Development and Reform Commission Vice Minister Ou Xinqian.

The larger figure was due almost entirely to robust growth in the service sector, long ignored by the outdated communist statistical system that focuses on manufacturing and relies on businesses to have a full-time employee to report statistics — something small, private firms rarely do.

The new data, compiled from 30 million businesses by the National Bureau of Statistics, put China’s 2004 gross domestic product at nearly 16 trillion yuan ($2 trillion). That’s up 2.3 trillion yuan ($285 billion) from previous numbers.

While the report didn’t say the figures were preliminary, it is possible that they will be revised when the National Bureau of Statistics releases official growth figures later this year.

The results show mainland China replacing Italy as the world’s sixth-largest economy, trailing the United States, Japan, Germany, Britain and France. Original figures put China’s economic growth at 9.5 percent in both 2003 and 2004.

Meanwhile, government tax revenue in 2005 totaled 3.087 trillion yuan ($382.5 billion), up 20 percent from the previous year, the State Administration of Taxation said over the weekend.

The figure doesn’t include customs duties and agricultural tax, a statement posted on the tax office’s Web site said. It didn’t provide a reason for the increase.

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