August 26, 2026: Article Points Out GDP Measures Territorial Production Scale
The article explains the distinction between GDP and GNI, noting that GDP follows the territorial production principle while GNI follows the resident income principle. It highlights the 1993 revision that renamed GNP to GNI, the World Bank's use of per capita GNI for income classification, and China's 2025 GDP and GNI figures. The piece argues for coordinating both indicators to reflect development quality and resident welfare.
GDP and GNI are two major aggregate indicators in the national economic accounting system, measuring the scale of economic development and the level of resident income from the dimensions of territorial production and resident income, respectively. GDP measures the final results of production activities of all permanent units in a country or region during a certain period, following the territorial production principle and directly reflecting the expansion of regional economic aggregates. GNP measures the final results of the primary distribution of income of all permanent residents, following the resident principle, including property and labor income obtained by domestic residents at home and abroad, while excluding factor income obtained by foreign residents in the country. After the 1993 revision of the System of National Accounts by five major international organizations, GNP was uniformly renamed GNI, with the accounting formula being GNI equals GDP plus net foreign factor income.
GDP is preferred when studying economic growth, industrial capacity, and regional development aggregates, while GNI is preferred when assessing resident income, livelihood welfare, and the distribution of globalization benefits; the two are complementary. In the current global economic governance system, GNI has become an internationally accepted core measure. The World Bank income classification system has used the Atlas method since 1993, dividing global economies by per capita GNI, which directly determines loan amounts and financing preferential conditions for countries, with standards updated every July. According to the World Bank, the high-income threshold effective July 2025 was per capita GNI of 13,935 US dollars, and the latest standard for fiscal year 2027 has been raised to 14,375 US dollars. UN membership assessments are based on the share of global GNI of member states over three to six consecutive years. Developed economies such as the United States, Germany, the United Kingdom, France, and Japan regularly publish both GDP and GNI data.
From the early reform and opening-up period to before the new era, China was in a developing stage with a weak economic base, a weak industrial system, and low per capita output, making the expansion of economic aggregates, the filling of development shortcomings, and the achievement of high-speed growth the top priority. GDP is intuitive, easily quantifiable, and comparable horizontally, highly matching the stage-specific needs of catch-up development and being the optimal statistical choice under specific historical conditions. In the new era, China's economic development stage has undergone a historic transformation, with the development theme shifting from high-speed growth to high-quality development. The shortcomings of the traditional single GDP accounting system in fully reflecting the global wealth creation and real sense of gain of the people have become increasingly prominent, and the application of the GNI indicator has a solid practical foundation and sufficient policy necessity.
As of the end of 2025, China's outward foreign direct investment stock reached 3,578.7 billion US dollars, ranking among the top three globally for nine consecutive years; overseas enterprises established by domestic investors cover 190 countries and regions worldwide. Factor income such as profits from overseas entities, equity dividends, and labor compensation is not included in domestic GDP under territorial accounting rules but all belongs to Chinese residents and enterprises. According to preliminary calculations, China's GDP in 2025 was 140.19 trillion RMB, and the annual gross national income GNI was 139.37 trillion RMB, with the difference indicating that current factor income obtained by foreign residents and foreign enterprises in China is higher than the net income obtained by Chinese residents and enterprises overseas. The central deployment for economic and social development during the 15th Five-Year Plan period contains a clear orientation for coordinating the use of GDP and GNI indicators to measure development effectiveness.
Statistical tools are only a means to assist in understanding economic reality, not development itself. Expanding the GDP aggregate is the material basis for improving GNI and distributing the development pie well; the two are progressive and complementary, not substitutive or opposing. The core of adjusting statistical tools lies in the innovation of development thinking, from focusing on GDP growth to coordinating GDP and GNI, which is essentially a profound shift in development orientation. Implementing statistical system reform must adhere to the principle of seeking truth from facts, balancing reform necessity and implementation feasibility. Customs, commerce, taxation, foreign exchange management, and statistical departments have built a full-chain data collection system covering cross-border investment, foreign factor income and expenditure, and profit remittance of foreign enterprises, providing solid data support for normalized precise GNI accounting. Benchmarking against the UN SNA accounting standards and the World Bank statistical framework, while basing on China's unique development stage of large foreign capital scale and rapid growth of outward investment, constructing localized accounting rules suitable for Chinese-style modernization, and gradually improving the normalized release of GNI indicators and supporting applications for assessment.
China's comprehensive national strength, economic aggregate, and industrial competitiveness have achieved historic leaps, but it remains the largest developing country in the world and has not yet reached the standard of developed countries. Coordinating the use of GDP and GNI indicators can more fully reflect the real income of the people and promote the fairer and more sustainable benefit of development outcomes to all people. The starting point and foothold of economic work must always focus on three core essences: the continuous expansion of people's wealth, the steady improvement of the quality of life of all people, and the steady enhancement of the country's comprehensive national strength. It is necessary to continuously improve domestic production capacity and economic scale, consolidate the domestic employment and industrial base; also to continuously support enterprises in going global at a high level, optimize overseas industrial layout, and enhance the profitability of overseas assets and the efficiency of profit repatriation. Only by continuously developing new quality productive forces, enhancing the added value of export products and knowledge-intensive service trade, and strengthening the voice of Chinese enterprises in the global value chain can we expand domestic GDP while increasing the net factor income of domestic residents overseas and continuously narrowing the income scissors gap between GDP and GNI.