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By How Much Is China’s Consumption Underestimated?
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TitleBy How Much Is China’s Consumption Underestimated?  
AuthorZhu Tian, Zhang Jun  
OrganizationChina Europe International Business School; Fudan University; 
Key WordsNational Accounts; Consumption; Economic Growth; Chinese Economy 
AbstractIt is widely believed that low consumption and unbalanced aggregate demand make Chinese economic growth unsustainable. In this paper, we argue that this belief is based on a misapplied theory and a grossly underestimated consumption ratio by official statistics. We investigate three sources of underestimation of household consumption expenditures by the official Chinese statistics and re-estimate China’s consumption ratio. Our results suggest that the rate of consumption in China is higher than 60% of GDP, not the 48-50% based on the official statistics figures, and is quite comparable to the level experienced by the high income East Asian economies during their own rapid growing period. 
Serial NumberWP562 
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