The fundamental problem calculating GDP is the price is right, wrong price can not figure out the correct GDP; when the planned economy all wrong, it is not possible to calculate the planned economy GDP. For example the Soviet-era money can not be freely traded commodity, and the money does not reflect the prices of commodities; when the Soviet reformed, all of a sudden drastic devaluation of deposits of residents, the residents of the great loss. The basic reason is that money can not measure the value that can not be a free exchange of money, its true value is far less than face value.
If the RMB becomes freely convertible hard currency, the RMB will rise; current RMB exchange can not be free, so China's GDP can not be very accurate. World Trade Organization finds that China is not a market economy, because the RMB is not fully free exchange, particularly in the area of investment, larger projects must for approval. Limited freedom of money, so the Chinese are not recognized as a market economy.
Today, we should pay more attention to the quality of GDP, not only the quantity of GDP, but also the better quality of GDP.
China's phenomenal economic growth in recent years was primarily due to growth in the secondary and tertiary sector of the economy. In fact, the primary sector (which is mainly the agriculture) grew only slightly since 1996 (changes in the proportions between primary, secondary and tertiary sector.
Among economists there is a debate about the true values of China's GDP growth. Some economists have argued that China's economic growth rates are actually much lower than reported by the National Bureau of Statistics. However, in the context of rural and regional development it is more important that the relative contribution of agriculture to China's GDP has declined significantly. China is clearly moving from an agricultural society to an industry and services based society - even in many rural areas.
There is a problem, how can we know wether the GDP is quality or not?
The first is inflation. The high GDP growth is likely to send out reminder bill, which will cause troubles, not a healthy GDP. The reason is simple, a number of countries issuing banknotes money can buy things, things with the buyer, the factory can speed up production. GDP is a reminder that out. Multiple bills will slowly cause inflation, on the contrary, deflation is not a good thing; so the price level stability is necessary for a good GDP.
And then, the fairness of the distribution of GDP. GDP is the output of wealth, does not involve the wealth allocated. Clearly a more equitable distribution of significant differences between the distribution of more than one good, the same GDP output, equitable distribution than the distribution of disparities. Sometimes to the equitable distribution of wealth would rather sacrifice a bit of output.
Third, how is the Environmental Protection doing? We may be obtained at the expense of the environment of high growth, this is a poor quality of the GDP. Environment, ruining the future of our children to spend money to governance, which mean that we borrowed the money of future generations engaged in GDP, in the future to repay the debt.This GDP components to contain false, obviously not a good GDP.
Fifth, are there many people are unemployed? Comparison of China and the U.S., China talk about how much GDP growth, do not ask the unemployed; U.S. GDP growth in the number of do not ask, just ask the unemployment rate. U.S. GDP growth has now returned to normal, but the unemployment rate over 9%. So that the economic crisis is not over yet. In China, the unemployment rate is simply no statistical data, local officials just to high GDP growth.
Our future in the pursuit of GDP, should be concerned about its quality.