Not as cheap as once thought

Recalculating China's GDP: Clipping the dragon's wings (The Economist, 19/12/07)

Previous estimates of China's PPP were largely guesswork. Now the World Bank has produced new calculations based on a survey of prices of over 1,000 goods and services in 146 countries, including China for the first time. On this basis, China's GDP in 2005 was $5.3 trillion, compared with $2.2 trillion using market exchange rates and $8.9 trillion using previous PPP estimates. ... The new PPP data suggest that there are three times more poor people in China than previously thought. If the numbers are to be believed, this means 300 million poor instead of about 100 million.

Revised productivity conceals some realities (IHT, 21/12/07)

Calculations of PPP rest on thorough surveys of prices for commonly consumed goods and services. Reliable data of this sort have simply been unavailable in China. ... Until recently, in determining China's wealth, the World Bank has had to rely on price information that predated the ascendancy of private business and the replacement of free or deeply subsidized state services by the market, hence the appearance of an economy that was far larger than it really was.

2005 International Comparison Program Preliminary Global Report Compares Size of Economies (World Bank, 17/12/07)

China participated in the survey program for the first time ever and India for the first time since 1985. These results are more statistically reliable estimates of the size and price levels of both economies. The new, improved methods rank China as the world’s second largest economy with almost 10 percent of world GDP and India follows as the fifth largest with over 4 percent of the world total.

Estimates of China’s GDP are 40 percent below the results of previous measures.