China to leave UK behind.
China is poised to overhaul the UK as the world's fourth-largest economy two years ahead of expectations after saying growth last year was 16.8 per cent higher than originally thought.
The sharp revision of data for 2004 was made after officials underestimated the contribution of service industries to its breakneck development.
Although China currently lags behind the UK and France, analysts said the stronger figures meant it should overtake the output of both nations this year.
The UK is estimated by the Treasury to have expanded by 1.75 per cent this year while Chinese economic growth has been running at 9.4 per cent quarter-on-quarter since 1993.
The revision came as the International Monetary Fund (IMF) praised the 'remarkable' stability of the UK economy which has weathered the slowdown in the housing market and higher energy prices.
Although the UK economy hit a 'soft patch' this year, the IMF expected it to grow by 2.25per cent in 2006 and expand by around 2.75 per cent in 2007.
The UK economy is valued at pounds 1.21 trillion, just ahead of China's at pounds 1.12 trillion following the revision, which added pounds 161.7 billion to the economy in 2004.
Julian Jessop, of Capital Economics, said: 'It was inevitable that China was going to overtake the UK at some point, but this revision means it has happened earlier than we expected.
'When you are making the transition from a planned economy to a market economy it is easier to measure production of things like shoes and cars and so on than to value services.
'Basically the figures are catching up with reality.'
The change is likely to reassure economists who feared China was heading for a hard landing as it means the country is less dependent on investment than previously thought and consumption appears to be stronger.
Chinese officials say the new figures should not affect their policy towards the exchange rate for the national currency - the renminbi - in spite of pressure from major trading partners that it is giving its exporters an unfair advantage.
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|Publication:||The Birmingham Post (England)|
|Date:||Dec 21, 2005|
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