TNAG-1457-FCO40-1981-Relations-between-Hong-Kong-and-China-1986 — Page 69

Annex

How does China compare with other countries in terms of

economic development?

In this Annex, national income and per capita national income figures are used as the basis for comparison. However, it should be noted that China's national income figures are underestimates because they have been compiled according to the Material Product System and do not included non-material services and -depreciation of fixed assets (which would need to be

included if the figures were compiled according to the UN System of National Accounts, which is followed by the other economies). Moreover, official price controls, widespread underground economic activities, under-reporting of income related to activities in the

free market and the existence of a sector devoted to

subsistence agriculture also tend to result in the

underestimation of China's national income.

2.

Despite these limitations, the following comparisons still give a broad indication of China's level of economic development relative to the selected

economies. In terms of absolute size expressed in US$, China's economy is about three times larger than that of South Korea, four times that of Taiwan, eight times that of Hong Kong and thirteen times that of Singapore. But in per capita terms, China's national income is much lower than these four Asian economies. Even allowing for

considerable underestimation in China's national income

figures, the difference is very significant.

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