China’s National Bureau of Statistics is expected to revise its GDP upwards by up to 20 per cent, or $300 billion, catapulting the country up from its position as the seventh- ranked economy on Earth.

Previously, China’s 2004 GDP was estimated at $1.65 trillion, but this figure appears to have failed to take into account small and medium- sized companies in the services sector, many of which try to avoid reporting the true size of their business to avoid tax.

Dong Tao, a chief economist at Credit Suisse, said: “Just take a walk into any restaurant in Shenzhen or Beijing. If you buy a meal without asking for the receipt, for tax reasons these things will not be in China’s GDP.”

China’s size and strong economic growth meant that it was only a matter of time before the Asian superpower overtook the UK and most of Western Europe. Even without the revision, China might have overtaken the UK this year, helped by favourable currency movements, and Goldman Sachs estimates that it will become the world’s largest economy in 35 years’ time.

The revision is due to be announced next week by the National Bureau of Statistics.

• The International Energy Agency (IEA) has shrugged off high energy prices, predicting that booming economies, such as China’s and India’s, will underpin growth in demand for oil over the next five years. The IEA said yesterday that it had adjusted its 2006 oil consumption growth forecast by 130,000 barrels per day (bpd) to 1.79 million bpd.

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