An entirely new estimate of GDP of the People's Republic of China has been recently made public jointly by the State Statistical Bureau of the Chinese Government and the COE Project (1997). By comparing its results with a recent estimate made by Maddison (1995, p. 191), one may observe that the annual growth rates of GDP in the both estimates are remarkably similar (Figure 2). There are, however, substantial differences in the rate of growth in the manufacturing sector between the new estimate and that of Wu (1997). Why the latter difference came about will be a very important subject for future investigation.
Compositions of GDE
Modern economists have inherited many valuable intellectual assets from past generations, including several hypotheses regarding the components of GDE. With regard to personal consumption, for instance, the permanent income hypothesis by Friedman (1957) still presents an attractive theoretical possibility and may deserve new attempts at checking against new data from the wider Asian region.
On the side of capital formation, one would be curious to find the movements in investment ratio I/Y, inasmuch as investment is the motive power of economic growth. Also highly relevant is a question how capital formation has been financed. Despite a widely-held view that workers in the early stage of economic development do not save much, there seems to be some evidence that this may not be necessarily the case, as Smiles (1861) reports that as a result of steady growth of workmen's earnings in the nineteenth century England they saved considerable proportions of their incomes.
A very exciting feature of the new SSBC/COE study (1997), as mentioned above, is that an effort has been made to complete long-term GDE series by revising the old MPS (material product system) version of gross expenditures. The estimated results reveal that the investment ratio has continued to grow after 1962, which has in turn been supported by a gradual increase in domestic savings rate (1 - average propensity to consume). It is interesting to note that both of these expenditure patterns are similar to those of pre-WWlI Japan, as reported by Ohkawa and Shinohara (1979, pp. 251-53) and depicted in Figures 3
