Decades long history. China entered the UNSNA (United Nations System of National Accounts) after excruciating negotiations and compromises. Ideologically, many economists in China were still wedded to the Soviet MPS (material production system) system where services were considered a cost of production and explicitly excluded from national accounts. The UNSNA itself also explicitly allows for leeway in how GDP is calculated “based on national conditions.” All UNSNA rules are best practices only. On its initial negotiations, the NBS (National Bureau of Statistics) tacked on a ridiculously low 13% to its MPS number and called it China’s services GDP. The negotiations with the World Bank were brutal with the Chinese side walking out of meetings many times. China wanted to be a developing economy for as long as possible. Their arm twisting in the 80s and 90s allowed China to enter the UNSNA system with lowballed numbers and a hybrid MPS/UNSNA system. China’s GDP today is a decades old compromise where 1) a massive chunk of services is excluded and 2) hedonic improvements have not been adjusted for decades. This has helped with WTO negotiations, China’s self conceptualisation as the leader of developing economies and China’s self conceptualisation as an eternally developing economy. It has been obvious for about a decade that the charade is untenable. I only say obvious things. I’m not that smart. A bit of scholarly history attached. tandfonline.com/doi/full/10.…