China May Boost GDP By Including R&D In Calculation

Debates over whether China's GDP will decline gradually or fall off a cliff have been going on for well over a year, but it could get a large, unexpected boost next year as China’s National Bureau of Statistics (NBS) is considering a change to its methodology.

“The NBS is planning to reclassify R&D as gross fixed capital formation rather than its current treatment as ‘intermediate consumption’. According to the NBS, expenditure on R&D was RMB1.2tn in 2013, and its share of GDP has grown steadily from 1.1% in 2003 to 2.0% in 2013. Therefore, recognizing R&D as GFCF will boost the level and growth rate of nominal GDP,” writes Bank of America Merrill Lynch economist Sylvia Sheng (h/t Zero...