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New Capital Estimates for China

Author

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  • Carsten A. Holz

    (Hong Kong University of Science & Technology)

Abstract

Data on physical capital are an indispensable part of economic growth and efficiency studies. In the case of China, fixed asset time series are usually derived either by aggregating gross fixed capital formation data over time, net of depreciation, or by correcting the limited official fixed asset data available. These procedures, to varying degrees, ignore that (i) gross fixed capital formation does not equal investment, (ii) investment does not equal the value of fixed assets newly created through investment, (iii) depreciation is an accounting measure that has no impact on changes in the production capacity of fixed assets, (iv) official fixed asset data, where available, incorporate significant revaluations in the 1990s, and (v) the variable 'net fixed assets,' frequently used in the literature, is an inappropriate measure of fixed assets for the purpose of growth or efficiency studies. This paper derives economy-wide fixed asset values for 1954-2002, correcting for these shortcomings. It also uses the so far unexplored method of combining economy-wide depreciation data (in the income approach to the calculation of gross domestic product) with an economy-wide depreciation rate to directly yield economy-wide fixed assets. The fixed asset time series derived here are contrasted with each other as well as with those presented in the literature. The reliability of the different series is evaluated, leading to the recommendation of a specific choice of fixed asset time series.

Suggested Citation

  • Carsten A. Holz, 2005. "New Capital Estimates for China," Development and Comp Systems 0504011, University Library of Munich, Germany.
  • Handle: RePEc:wpa:wuwpdc:0504011
    Note: Type of Document - pdf; pages: 45
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    File URL: https://econwpa.ub.uni-muenchen.de/econ-wp/dev/papers/0504/0504011.pdf
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    References listed on IDEAS

    as
    1. Holz, Carsten A., 2004. "Deconstructing China's GDP statistics," China Economic Review, Elsevier, vol. 15(2), pages 164-202.
    2. Jefferson, Gary H. & Rawski, Thomas G. & Li, Wang & Yuxin, Zheng, 2000. "Ownership, Productivity Change, and Financial Performance in Chinese Industry," Journal of Comparative Economics, Elsevier, vol. 28(4), pages 786-813, December.
    3. Wang, Yan & Yao, Yudong, 2003. "Sources of China's economic growth 1952-1999: incorporating human capital accumulation," China Economic Review, Elsevier, vol. 14(1), pages 32-52.
    4. Chow, Gregory C & Li, Kui-Wai, 2002. "China's Economic Growth: 1952-2010," Economic Development and Cultural Change, University of Chicago Press, vol. 51(1), pages 247-256, October.
    5. Jefferson, Gary H. & Rawski, Thomas G. & Zheng, Yuxin, 1996. "Chinese Industrial Productivity: Trends, Measurement Issues, and Recent Developments," Journal of Comparative Economics, Elsevier, vol. 23(2), pages 146-180, October.
    6. Jefferson, Gary H & Rawski, Thomas G & Yuxin, Zheng, 1992. "Growth, Efficiency, and Convergence in China's State and Collective Industry," Economic Development and Cultural Change, University of Chicago Press, vol. 40(2), pages 239-266, January.
    7. Alwyn Young, 2003. "Gold into Base Metals: Productivity Growth in the People's Republic of China during the Reform Period," Journal of Political Economy, University of Chicago Press, vol. 111(6), pages 1220-1261, December.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Capital; fixed assets; investment; national income accounting; production function estimations; measurement of economic growth; Chinese statistics;

    JEL classification:

    • C80 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - General
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • P23 - Economic Systems - - Socialist Systems and Transition Economies - - - Factor and Product Markets; Industry Studies; Population
    • P24 - Economic Systems - - Socialist Systems and Transition Economies - - - National Income, Product, and Expenditure; Money; Inflation

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