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What is measured on GDP?
Imputed Rent for Homeowners
USA: The U.S. systematically includes imputed rent β homeowners are assumed to βpay rent to themselves.β This adds a large component to household consumption.
China: Only counts actual rents, not imputed rents. This understates household consumption compared to the U.S.
Research & Development (R&D) as Investment
USA: Since 2013, the U.S. classifies R&D as investment in GDP, boosting capital formation and recognizing the role of intellectual property.
China: Officially tries to follow, but implementation is inconsistent and measurement is weaker. Some R&D is still treated as costs, not investment.
Intellectual Property Products (IPP)
USA: Includes IPP categories broadly (R&D, software, databases, artistic originals). The U.S. was one of the first to push for capitalization of IP products.
China: Includes some, but scope is narrower and data coverage less developed. Software and cultural products are undercounted relative to the U.S.
Illegal / Underground Economy
USA: Illegal activities (like drugs or prostitution) are not included in GDP. Some underground activity may be indirectly captured through surveys, but coverage is minimal.
China: Does not include illegal activities in GDP either, and much of the gray/underground economy is unmeasured.
Household Production / Informal Sector
USA: Some unpaid household work (like childcare, cooking, subsistence gardening) is excluded, but informal activities are partly estimated. Overall, the informal sector is relatively small.
China: Has a much larger informal and subsistence sector, but most of it is unrecorded in GDP, meaning official GDP misses a large share of real economic activity.
