torresmall.jpggdp-global.gifAs reported previously, China's mammoth revision in GDP turns the country into a much larger economy overnight. But the official figures, published December 20, do not support earlier speculation that the revision would vault China from seventh to fourth place in the league table of economies.

Instead, China moves ahead just one place, to sixth and overtakes Italy. That is more bad news for the Italians who regularly complain about the effect Chinese imports are having on many sectors of their structurally weak economy.

Ironically, a similar statistical controversy erupted in the late 1980s when Italy claimed to have vaulted ahead of the UK to become the world's fifth largest economy — an effect called il sorpasso* or overtaking. But il Made in Italy has given way to il Made in China.

Italy may have had to throw in the towel but, for the time being, France, Germany and the UK can breath a sigh of relief. The official statistics show that China's sorpasso is not as rapid as some observers had feared. According to the Asia Times, China opted for a more moderate interpretation of the data to avoid ruffling the feathers of its more hawkish trading partners who are increasingly nervous about China's growing economic might.

“Many recent government statements are consistent with this interpretation: for example, the 'peaceful rise' policy referred to many times by top officials in recent months.

The main factor behind the uplift in GDP lies in previous under-reporting of China's fast-growing services sector — the share of GDP taken by services rose from less than 32% to more than 40%.

It is revealing to see how this seemingly dry economic story has been picked up by mainstream press around the world. For example, El Diario Vasco, in Spain's Basque Country, ran a leader (Spanish only) on the revision titled “Imparable China” — unstoppable China.

“The speed of economic growth in China does not cease to surprise year after year. Despite the suspicions that the Beijing government has manipulated the figures, the GDP growth rates and its absolute size fuel speculation as to just how far and at what rate the Chinese economy can keep on growing. (..) The increase in the size of the services sector more closely aligns the economic structure of the country with that of an advanced economy.

The Basque regional 'paper notes that with the revision, the Chinese economy is twice the size of Spain and very close to France and the UK. If it continues growing at current rate, China 's economy will soon reach and presumably surpass all the European countries, the paper warns darkly.

*Il Sorpasso is also the title of a great 1961 film by Dino Risi which perfectly captures the essence of never-had-it-so-good Italy in the boom years of the 1960s — and has obvious parallels with China's current boom.