CHINA could overtake the US as the world’s biggest economy within just three decades, economists said yesterday after Beijing reported that the country’s national income is a sixth higher than previously reported.

The upgrade to the present scale of China’s economy came after a radical overhaul of its official figures, following a nationwide census which confirmed that there had been vast underaccounting for activity both in its service sector and in Chinese private enterprise.

Previous data had failed to keep pace with the rapid shrinkage of state-owned industry under China’s programme of economic reform.

On the new data, China has eclipsed Italy as the world’s sixth largest economy and should overtake France and Britain next year. It would already have done so if Hong Kong, which is accounted for separately, had been factored in.

China’s GDP is now reckoned to have been worth just under 16trillion yuan, or $1.93 trillion (£1.1 trillion) last year, 16.8 per cent more than it had thought. Projections by Goldman Sachs show that, on present trends, China will leapfrog the US to become the world’s biggest economy by 2035.

Goldman’s previous assessment was that China would reach this watershed by 2040.

Economists said the new data should ease fears that excessive investment could see China’s economy overheat and trigger an abrupt downturn. With the economy now much larger, present investment levels account for a smaller, proportion of GDP.

Service industries — such as telecommunications, retailing and real estate — accounted for 93 per cent of yesterday’s revisions and boosted the service sector’s share of GDP last year to 40.7 per cent from 31.9 per cent.

“We have cut off the past, we have got rid of the millstone and we are moving forwards,” Li Deshui, the head of China’s National Bureau of Statistics, said.

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