GDP Fail

China to create new methods to evaluate 'new economy', official says

Chinese authorities are studying new methodologies to assess the economic contribution from industries seen as part of the “new economy”, a deputy head of the country’s statistics bureau said in speech published on Sunday.

The new economy encompasses operators from biotechnology companies to online retailers but the rise of some new and high-growth industries has brought challenges to evaluating economic growth.

...Such services were underestimated, leading to lower official GDP numbers, he added.

There's no growth, that's why people turn to free services. If the economy were growing, free services would lead to increased spending elsewhere or higher total spending. People aren't spending money because in order to spend more money, they must take on new debt, which they are loathe to do as they are already perched on the edge of bankruptcy.

Medieval astronomers had to create epicycles to explain the movement of planets in a model that assumed the Earth was at the center of the Universe. Mainstream economics (Keynesian and neo-classical) are engaged in a similar project because they do not include debt in their models.