As you consider doing business in China, you might wonder how well your concept will succeed. You probably consider your return on investment (ROI). And you likely consider the country’s gross domestic product (GDP).
While the numbers may not be the only consideration among international deals, they likely weigh heavily on your decision. In the United States, the GDP grew nearly 3 percent in 2018. But is China facing an economic decline?
There is skepticism surrounding China’s reported GDP
Controversy about China’s GDP figures may be nothing new. However, a recent reduction in China’s 2019 target GDP growth was reduced to “between 6 and 6.5 percent.” Skepticism regarding China’s economic growth may be related to:
- Data doctoring – Inflation can compromise provincial data outputs. And local officials may overstate their reports while seeking promotion. However, China’s National Bureau of Statistics (NBS) is taking control of collecting regional data, beginning this year.
- Value-added production – Whereas most developed countries, including the U.S., use the expenditure method to calculate GDP, China uses a system focused on what they produce.
Perhaps prior to doing business in China, it would be wise to consider other metrics as well, while China increases data transparency. For example, it might be good to consider how China ranks for doing business.
How China compares to other countries
Forbes includes 161 countries on their 2018 “Best Countries for Business” list, with the Central African Republic at the bottom. Based on population, GDP growth, GDP per Capita and the Trade Balance/GDP, the U.S. ranks number 17 and China sits at 49.
While you prepare yourself for international business deals, you can watch for NBS reports. And if data transparency improves in China, you may be presented with a stronger opportunity to develop your company internationally.