China's GDP expenditure accounts present an alternative to the official value-added and production-method accounts used to report growth and per-capita living standards. Indeed, in a strong sense, expenditure accounts are the best measure of an economy's output, because they measure what really comes out of the economy that is used by citizens, business, government, and the rest of the world. In fact, expenditure accounts are the preferred GDP reporting methods for most developed economics. However, in China's case, measurement of the components of expenditure GDP has significant flaws, which affect its use to check official reports of GDP growth and level. Still, understanding expenditure GDP, warts and all, strengthens our sense of China's GDP reporting accuracy, as well as the accuracy of outside estimates of China's purchasing power parity (PPP) GDP. (C) 2002 Elsevier Science Inc. All rights reserved.
