GDP Photo: VCG

An official from the National Development and Reform Commission (NDRC), China's top economic planner, said that the larger economic gap between China and the US was largely due to higher US inflation, which swells its nominal GDP volume. 

Zhao Chenxin, vice chairman of the NDRC, made the remark at a press conference held on Monday during China's ongoing two sessions, noting that "multiple economic indicators" affected the calculation of GDP.

Zhao said that China's economic growth came in at 3 percent in 2022 while US economic growth reached 2.1 percent. "However, the China-US GDP aggregate gap was the comparison between two nominal GDPs which is calculated based on the current price of their respective currencies, which are prone to be heavily impacted by a spate of factors such as commodity prices," said Zhao. 

Zhao said that, on the one hand, US experienced elevated inflation in 2022 with CPI and PPI recording a year-on-year increase of 8 percent and 16.5 percent, respectively, which largely raised the country's nominal GDP. 

On the other hand, China's commodities price remained largely stable as CPI and PPI increased by 2 percent and 4.1 percent year-on-year, respectively.

"To curb inflation, the Federal Reserve resorted to seven interest hikes in a row, raising the federal funds rate to the highest level since 2007, which also caused a passive depreciation of many other currencies including Chinese yuan," he said.

Zhao added that the GDP gap should be calculated after adjusting China's GDP from yuan into US dollars, in which the exchange rate plays a significant role in impacting the final numbers. 

Zhao emphasized that China has made marked progress in ramping up domestic economic development in 2022 despite various headwinds at home and abroad, and China is willing to proactively contribute the global economic development.

Global Times