Bulletin on the Final Verification Data of GDP in 2014

National Bureau of Statistics of China

January 7, 2016

According to regulations of the NBS on the notice of print and distribute the reform of China’s GDP accounting and data release system, the annual gross domestic product (GDP) accounting includes preliminary accounting, preliminary verification and final verification. Recently, the NBS conducted the final verification of GDP in 2014, based on relevant annual statistical report of 2014, financial statistics, and financial accounts data, the main results are as follows:

After final verification, the total GDP at current price in 2014 amounted to 63,591.0 billion yuan, a decrease of 22.9 billion yuan than the preliminary verification number, and a year-on-year increase of 7.3 percent at constant price, which was the same as the preliminary verification result. Please see the attached table for data of each industry.

Notes: Due to error generated from rounding off of numberical value, among the total GDP and its data composition, some data is not equal to the sum of all industries, and no mechanical adjustment is made for that.

Annual GDP Accounting Instructions of China

1. Overview on Annual GDP Accounting

1.1 Basic Concepts

Gross Domestic Product (GDP) refers to the final products at market prices produced by all resident units in a country during a certain period of time. GDP is the core indicator of the national accounts, and also an important indicator to measure the economic conditions and the level of development of a country.

In the practice of national accounting, gross domestic product is calculated using three approaches, namely production approach, income approach and expenditure approach, which reflect gross domestic product and its composition from different angles. The production approach refers to remove the value of intermediate goods and services from the value of goods and services created in the production process, and to get the value-added. The accounting formula as follows: value-added = total output - intermediate inputs. The GDP by production approach is the sum of value-added by production approach of various industries of national economy. The income approach refers to accounting the production activities from the point of generating income during the production process. Under this accounting method, the sum of the value-added obtained from four parts: workers compensation, net taxes on production, depreciation of fixed assets and operating surplus. The accounting formula as follows: value-added = workers compensation + net taxes on production + depreciation of fixed assets + operating surplus. The GDP by income approach equals to the sum of value-added by income approach of various industries of national economy. GDP by expenditure approach refers to the method of measuring GDP from the perspective of the final uses of production activities. The final uses include final consumption expenditure, gross capital formation and net export of goods and services.

GDP at constant price refers to the value calculated at a constant price of fixed base period, converted from the GDP at current price. It has eliminated the effect of price changes, to make the value of different periods comparable.

1.2 Accounting Coverage

1.2.1 Production Coverage

Production range of GDP accounting includes the following three parts: firstly, the production of goods and services provided to or ready to provide to other units by the producers, secondly, subsistence production of goods for own final consumption or capital formation by the producers, thirdly, owner-occupied housing services of owner-occupied housing owners to provide for their own final consumption, and paid subsistence family service production. Production range does not include subsistence family services without remuneration, nor no units controlled natural activities (such as wild, non-cultivated forest, berries or wild berries natural growth, the natural growth of the number of fish in the public sea), etc.

1.2.2 Geographical Scope

The GDP accounting range principally covered all economic activities of all resident units having center of economic interests within China's economic territory. The quarterly GDP data in this report is national data produced by the NBS, GDP data of Hong Kong SAR, Macao SAR, and Taiwan Province is not included.

1.3 Accounting Unit

GDP accounting mainly uses corporate units as the accounting units, in the process of accounting, the corporate units are divided into different industries according to their principal activities, and calculate the value-added of each industry separately, and then aggregate the value-added of every industries into GDP.

1.4 Accounting Steps

In accordance with the timeliness requirements of GDP accounting, annual GDP accounting of China has three steps, which are GDP preliminary accounting, preliminary verification and final verification. Every accounting result will vary.

1.4.1 Preliminary Accounting

As China's quarterly GDP accounting is cumulative before 2015, the GDP preliminary accounting of 1-4 quarters is annual GDP preliminary accounting. Since March 2015, China's quarterly GDP accounting is completed quarterly, which means calculating the GDP of four quarters respectively, and totaling them up to produce the annual GDP preliminary accounting results. Annual GDP preliminary accounting is accomplished before 20 January. 

1.4.2 Preliminary Verification

Annual GDP preliminary verification is completed before the end of September of the following year. The reason to do the annual GDP preliminary verification is to get more comprehensive and reliable basic data, including the professional statistical annual report of the NBS, the annual financial information of some industries and so on. Using these data, the value-added of industries can be accounted respectively using production approach or income approach.

1.4.3 Final Verification

The annual GDP final verification was completed in January of the following year. The reason to do the annual GDP final verification is the acquisition of new basic information after annual GDP preliminary verification, including financial accounts data and the annual financial information of some industries and so on. Similar to annual GDP preliminary verification, using these data, the value-added of industries can be accounted respectively using production approach or income approach.

1.5 Related Laws and Regulations

GDP accounting was strictly complying with the provisions of the Statistics Law of the People's Republic of China. At present, China's GDP was measured in accordance with the requirements of the System of National Accounts (2002)"(CSNA), the system adopted basic accounting principles, contents and methods by the "National Economy Accounting System"(SNA) of United Nations in 1993.

1.6 Confidentiality

According to the Article 9, Chapter I of the Statistics Law of the People's Republic of China, statistics institutions and statisticians shall keep confidential the State secrets, business secrets and personal information that are learned in the process of statistical work.

The staff related to national accounting will strictly keep the confidentiality of the statistical data of subject matter areas and administrative records data used in GDP accounting, so as to the GDP results of the current period before releasing.

1.7 User Needs

The main domestic users of annual GDP data are the government departments, research institutions, universities, trade associations, the media, and the public. In addition, the NBS regularly provides China’s annual GDP data to international organizations, such as the UN, the IMF, OECD, ADB, etc.

2. Accounting Methods of Annual GDP

2.1 Classifications

During quarterly GDP accounting, industry classification is carried out in two ways, according to the Industrial Classification for National Economic Activities of China and the Three Industries Classification Standard.

The first classification is the Industrial Classification for National Economic Activities, adopting the “Industrial Classification for National Economic Activities” ( GB/T4754－2011) issued by national standard administrative department. Two-level classification is used in the actual accounting.

The first level of classification is basically the sectors in the Industrial Classification for National Economic Activities, and is divided into agriculture, forestry, animal husbandry and fisheries, industry, construction, wholesale and retail trade, transport, storage and post, accommodation and restaurants, finance, real estate, and other service industries. Of which, industry includes three sectors, i.e., mining and quarrying, manufacturing, production and distribution of electricity, heating power, gas and water. Other services include 9 sectors, i.e., information transmission, software and information technology services, renting and leasing activities and business services, scientific research and development, technical services, management of water conservancy, environment and public facilities, resident services, repair and other services, education, health care and social works, culture, sports and entertainment, public administration, social security and social organizations.

The second level of classification is refined into divisions, based on the first level of classification. 

Different detailing degree of the second level of classification is the difference between the industry classification adopted by annual GDP preliminary accounting and that adopted by annual GDP preliminary verification and final verification.

The second classification is the Three Industries Classification, according to the Three Industries Classification Regulations enacted in 2012 by the NBS, divided into primary industry, secondary industry and tertiary industry. Primary industry refers to agriculture, forestry, animal husbandry, fisheries (excluding service industries of agriculture, forestry, animal husbandry and fisheries); secondary industry refers to mining and quarrying (excluding mining support service activities), manufacturing (excluding repair of  fabricated metal products, machinery and equipment), production and distribution of electricity, heating power, gas and water, construction; tertiary industry is service industry, and refers to the other industries except primary and secondary industry (excluding international organizations).

2.2 Sources of data

Annual GDP preliminary accounting adopts the methods and data sources of quarterly GDP accounting. Only the data sources of annual GDP preliminary verification and final verification will be given here.

The first part is national survey data, which refers to the various statistical data obtained from the statistical surveys conducted by the national statistical system, such as statistical survey data of agriculture, forestry, animal husbandry and fisheries, industry, construction, wholesale and retail trade, hotel and catering services, real estate, etc., sampling survey data of services industry, data of population and labour, wages statistics, and data of price statistics, etc..

The second part is departmental annual financial information, which is the annual financial accounts data of different industries, unified by the NBS and organized as well as implemented by relevant administrative departments and part of the state-owned enterprises, such as the annual financial information summarized by the Ministry of Transport, National Health and Family Planning Commission, and the China Petrochemical Corporation, as well as the owned enterprises or institutions of them.

The third part is financial accounts data, which is the fiscal revenue and expenditure accounts data compiled by the Ministry of Finance, and the revenue and expenditure accounts data of administrative institutions of central departments.

The fourth part is the administrative record data from administrative departments, and mainly includes relevant data from the State Administration of Taxation, the People's Bank of China, the China Insurance Regulatory Commission, China Securities Regulatory Commission, for example, financial institutions and foreign currency credit balance of payments situation of the People's Bank of China, and tax information by industry of the State Administration of Taxation.

2.3 Accounting methods

Annual GDP preliminary accounting adopts the methods of quarterly GDP accounting, which will not be explained here. The methods of annual GDP preliminary verification and final verification will be given below.

2.3.1 Accounting Methods of Value-added at Current Price

The value-added at current price of agriculture, forestry, animal husbandry and fisheries is calculated in production approach, while that of other industries is calculated in income approach.

2.3.2 Accounting Methods of Value-added at Constant Price

Value-added by industry at constant price is calculated using fixed base period method, and currently the base period is replaced once every five years. The base period is 2010 at present.

Annual GDP accounting at constant price mainly uses method of price index deflation and method of volume indices extrapolation.

2.3.2.1 method of price index deflation

This method means directly deflating value-added at current price by using relevant price index, and calculating value-added at constant price. The accounting formula as is follows:

Value-added at constant price of some industry = value-added at current price of the industry÷ price index of the industry

2.3.2.2 method of volume indices extrapolation.

This method means calculating the growth rate of value-added at constant price by using the growth rate of relevant volume indices, then multiplying value-added at constant price in the same period of last year and the calculated growth rate of value-added at constant price, to obtain current value-added at constant price. The accounting formula is as follows:

Value-added at constant price of some industry = value-added at constant price of the industry in the same period of last year × (1+ growth rate of value-added at constant price of the industry)

Of which, the growth rate of value-added at constant price is determined according to the growth rate of relevant volume indices (such as transport turnover and employees) this year, as well as the quantitative relation between the growth rate of value-added at constant price and the growth rate of relevant volume indices in previous years.

3. Revision of annual GDP data

3.1 The necessity for revision

Preliminary accounting of annual GDP data have strong timeliness, generally it is released about 20 days after that year. At this time, as the large amount of annual financial information can not meet the requirements of annual GDP accounting in time, the basic information on which the initial count of annual GDP accounting are based are monthly data and quarterly data, the annual GDP data calculated accordingly are estimated to a great extent. After that, as the basic information continues to increase, especially the annual financial information is submitted successively, the GDP data should be revised duly based on more comprehensive and reliable basis information, in accordance with the common practice in different countries.

3.2 Revision procedures[1]

In accordance with “regulations on the reform of China’s GDP accounting and data release system”, China’s quarterly GDP accounting has three steps, which are preliminary accounting, preliminary verification and final verification. Preliminary verification is the revision of preliminary accounting data, and final verification is the revision of preliminary verification data. After carrying out national economic census and having found new basic information that has a great impact on GDP data, or with calculation methods and classification criteria changing, the historical annual GDP data will be revised accordingly.

4. Quality assessment on annual GDP data

4.1 Assessment on basic data

For the statistical data of subject matter areas and the administrative records data used in GDP accounting, the relevant statistical departments and administrative departments will examine their quality to ensure that the data reasonably reflect the actual situation of economic development. After getting these basic data, The GDP accounting department will examine the completeness and accuracy of the data once again to ensure that these data are consistent with the GDP accounting concepts and requirements.

4.2 Assessment on accounting methods

In GDP accounting process, the GDP accounting department will revise China's quarterly GDP accounting method in accordance with the actual situation of China’s continually developing economy, and in accordance with the standards of national accounting which are constantly improving, so as to ensure the rationality of accounting methods.

4.3 Assessment on accounting results

After getting the annual GDP accounting data, it is needed to examine GDP and its sub-item data, as well as the coherence of GDP data and other accounting data, the statistical data of related subjetc matter areas, statistical data from different departments, to ensure the coherence and matching of GDP data and other key data.

4.4 Comparability of data

4.4.1 International Comparability

China’s National Economic Accounting System (2002) adopted the basic accounting principles, contents and methods of the United Nation's System of National Accounts (SNA) in 1993, therefore the annual GDP data of China are internationally comparable.

4.4.2 Comparability of Time Series Data

After the national censuses have been carried out, or the calculation methods and classification criteria have been changed, not only the GDP data of the year will get re-accounting, but also the historical GDP data will be revised. Therefore, time series data of annual GDP are comparable since the 1952.

5. Annual GDP data release

5.1 Release date

Preliminary accounting data of annual GDP are generally released about 20 days after that year. Preliminary verification data of annual GDP are released at the end of September of the following year. Final verification data of annual GDP are released in  the following January.

5.2 Release methods

Preliminary accounting data of annual GDP will be released at the Annual Statistical Press Conference, on the NBS website (www.stats.gov.cn), and in the “China Monthly Economic Indicators”. Preliminary and final verification data of annual GDP will be released on the NBS website (www.stats.gov.cn) as bulletins. At the same time, preliminary verification data of annual GDP will also be published in the “China Statistical Yearbook” next year, and final verification data of annual GDP will be published in the "Statistical Abstract of China" and "China Statistical Yearbook" the year after next. national statistical database (http://data.stats.gov.cn) will be updated simultaneously.

[1] National GDP data is constantly revised based on more complete and reliable basic data, which is the international practice of GDP accounting. For example, the annual GDP data of America will be revised five times after the estimating data is released in May next year; the annual GDP data of Canada will be revised three times after the first release in early March next year; the annual GDP data of Germany will be revised four times after the release in January next year.