Purchasing Power Parities between Japan and China by Industry
Yanjuan Dai, Jie Li, Hiroshi Izumi
School of International Trade Economics, Guangdong University of Foreign Studies, Guangzhou, Guangdong, China; Department of Economics, Saitama University, Saitama, Japan; Department of Economics, Osaka University of Economics, Osaka, Japan

Introduction: With the development of the Chinese economy, many people are interested in China's real economic scale. The 2005 International Comparison Program (ICP) estimated Purchasing Power parities (PPPs) of 146 economies including China. As there are large gaps in economic institutions and life style between developed countries such as US and Japan and developing countries such as China, so the produced and consumed products are in nature quite different both in type and in quality, and there are few products of the same type and the same quality. So the results of the China's PPP in 2005 are not fully satisfied.

We estimate PPPs by industry in own way in order to convert not only GDP but also input-output tables of Japan and China into common currency unit and prices. Because no basic survey for necessary data such as price and quantity has done by governmental institutions in China, there are many difficulties in estimating China's PPPs. We tried our best to make use of existing data and to supplement some data through our own surveys, and then calculated PPP by using these limited data.

We before estimated the 1990, 1995 and 2000 PPPs between Japan and China. This time we have estimated the 2005 PPPs between them.

Estimation of the Purchasing Power Parities between Japan and China by industry: For calculating PPPs by sectors, at first, we collected as many products' price data available in both China and Japan as possible. This time we used mainly the following data, China: “Data of the Prices Observation Center of National Development and Reform Commission”, “Chinese Trade Statistics of 2005”; “Chinese price data through Prof. Kiji”, Japan: “Retail Price Survey”, “The supporting table on domestic products by sector and commodity in Japan's 2005 Input-Output table”, “Japanese Trade Statistics of 2005”. In 1995, we used industrial census of China, but this time we could not economic census of china of 2004, because it does not include suitable data. This time we have more used Trade Statistics than before, for we can get Chinese more detailed price data from them than others.

We tried to chose the samples according to the comparability (type and quality are the same in the two countries) and the representativeness (The amount of the product has a large ratio in the economy). We tried to adjust various prices into producer prices.

We have calculated PPPS not only by using Fisher method and Geary-Khamis (GK) method but also by using our original method (Total labor method).

At last we compared our results with ICP's, and analyzed the reasons of their differences.

Keywords: Purchasing Power parities; China; Japan; Input-Output Table

Biography: Dr.Dai,Yanjuan was brought up in Guangdong Province in China. She studied in Japan at Saitama University and Hosei University from 2001 to 2007and has got PHD Of Ecomics. She is now researching about the comparison of Chinese economy and Japanese economy in corporatin with Japanese researchers. She now works for Guandong University of Foreign Studies.