An informal economy (or shadow economy) is the part of any economy that is neither taxed nor monitored by any form of government.
The Informal sector makes up a larger share of poorer, more agricultural and less developed economies.
In many poorer countries as found in the Frontier Markets, a very large swathe of activity can remain uncounted and hence outside national accounts. Due to the nature of much informal work, ranging from housework, farming through to gambling, prostitution, drug dealing, and smuggling, calculations of the value of such activities are difficult.
The size of China’s informal economy is estimated to be 12.7% which represents approximately $3,160 billion at GDP PPP levels.