Mr. Lou Jiwei 

Vice Minister

Ministry of Finance of China

China’s economy has kept sustained, sound and rapid growth for over 20 years. In those years, the course of reform is progressing step by step; at the same time the development and reform in statistical work follow the same suit. Till now, improvement has been seen in statistical services, significant progress has been made in statistical methodological reform, which made important contribution to enhancing economic analytical work, to boosting economic development and to serving the public. Those achievements have been made in a step-by-step way.

The advantage of adopting this method is that it is stable and learnable. An introduction of a complete set of new technical system will daunt most of the people. However, if we make gradual changes, it will be conducive to people learning from it and making steady progress. It is also applicable to economic reform, we can further improve the efficiency of resources allocation and let the people benefit from it, and it will in turn to carve out the way for reform itself.

However, this method has its own disadvantages. Gradual course sometimes causes the delay of reforms in certain areas, and generally those areas are the most crucial points for the overall situation. For instance, the reform of commercial banks of China is lagging behind, now it will rely on financial support of the nation to solve the problem. Statistical reform shares the same difficulty.

In spite of those problems, significant progress has been made in statistical methodological reform, and the indicator system is more scientific than it used to be. In 1983, when I was a graduate majored in economics, the data provided by statistical bureau were not complete; we had to compute the data we needed by ourselves. As time goes on, I realize that the indictors are easy to use now. According to my own point of view, the basic statistical system was taken shape in early 1990’s. At that time, Chinese statistical system shifted from Material Production System (MPS) to System of National Account (SNA). The first step was the introduction of the basic concepts, which took place in early 1980’s, then transferred the former total volume system to current value-added system. Finally, GDP is used to replace the national income; therefore, a price indicator system is established to reflect the changes in the market. Those changes were gradually formed from 1980s to early 1990s. There are problems still exist in statistical work. I used to be a vice governor of a province in charge of statistical work, therefore, I would like to take this opportunity to point out the major problems exist in statistical work.

The first problem is the institutional construction. Statistical bureaus could be found at various levels, namely starting from county level to national level, it is a kind of lengthways structure. The management module we are using is “centralized leadership with decentralized responsibilities”. However, this kind of top-to-bottom management pattern and inspection method is not dynamic, it cannot safeguard the independency of statistical work. Data collected are incidental to administrative interference from the local authorities. Therefore, under this management system, National Bureau of Statistics lacks restrictive means to guarantee effective inspection.

When I was in charge of statistical work as vice governor, I always found that data provided by local statistical bureau were not the same as provided by other departments concerned. For instance, related department always questioned the data provided by local statistical bureau on growth of output value of township enterprises, they thought it was underestimated. The other example is the GDP growth of the province; some departments doubted about the data, I was the one who was responsible for coordinating. Normally, I would like to start from data checking, it always lead me to the conclusion that the data provided by statistical bureau were good enough. However, I still believe that if they asked a governor who had no background of statistics to be the coordinator, it might be a different story; probably the political pressure would keep the weather.

In terms of institutional structure, statistical bureau is also responsible for coordinating statistical work of related departments. To my knowledge, some of the incomplete data could be further improved through sound coordinative system.

The second problem is the incomplete statistical indicator system. The current indicator system could not draw a full picture to reflect the overall market economic operation, the establishment and development of the factor market and the effectiveness of policies. Though we do have a thick and comprehensive statistical yearbook, some of the indicators in the yearbook are out of date, they still have the trace of planned economy, which cannot unveil existing problems. We need those indicators that could be pertinencier and more complete. For instance, we lack the evaluation indicators to reflect the factor market, employment and social security issues. We lack indicators to cover the new-emerging social service and commercial service prices that are needed by the national accounts. We have year-on-year change based CPI indices, however, till now, we still lack the month-on-month CPI indices that are seasonal adjusted and annualized. The year-on-year indices are suitable for agriculture, due to the seasonal fluctuations, the income and price changes are significant from the planting season to harvest time. With the progress of industrialization, the seasonal factors are totally different as compared with that in the previous period, we need month-on-month and seasonal adjusted price indices, which are more sensitive to current economic situation. According to my personal estimation, if we have the month-on-month price indices in place, the annualized price indices will be over 5% after seasonal adjustment. Due to the lack of this indicator system, we cannot tell this trend by using the current indicator system. This is the pitfall of the statistical indicator system.

Thirdly, the basic data for national accounts are not sound enough. Though China abolished MPS and introduced the SNA for quite a long time, the basic data are still far from satisfactory. There are problems exist in current statistical work. For instance, when we shifted from MPS to SNA, the output value of industrial enterprises is still calculated by using constant prices, this will influence the accounting of the value-added figures. The other shortcomings in statistical work are the rough classification of industries and expenditure items, and the lack of the indicators to reflect the formation and utilization of distribution in kind. Because of the above-mentioned three problems in basic data for national accounting, I believe that reforms are needed.

We need further improve and perfect both the statistical management system and the statistical methodologies to meet the need of establishing a socialist market economic system.

First, we should enhance the guidance to local statistical bureaus, and strengthen the role of NBS in supervising and coordinating the ministerial statistics. An information sharing-system should be established among ministries and departments. I don’t know if NBS could work out a good method to handle local statistics. In fact, let the provinces to release their GDP figures is not a good practice. First of all, it is hard for provinces have a clearly picture of imports and exports, whether the imports and exports are generated by international trade or cross provinces or cities trade. In terms of methodology, I cannot say that their GDP figures are falsification, but it is true that the summation of local GDP figures is not equal to the provincial GDP figure, and the summation of provincial GDP figures is not equal to national total. I sincerely hope that NBS could provide guidance to local statistical bureaus in terms of methodologies and managerial system. A sound mechanism is needed to guarantee the accuracy of statistics.

Secondly, reform should also be in line with the scientific viewpoint of development. With the progress of economic reform and development, now China is facing the difficulties in the areas of income distribution, regional development and the high consumption of natural resources. Therefore, Chinese authorities put forward the “five-balance”, i.e., balancing urban and rural development; balancing the regional development; balancing economic and social development; balancing the harmonious development of human being and the nature and balancing domestic development and open-up to the outside world in the aim of keeping the sustainable growth of the economy.

I believe that statistical indicator system should reflect various activities, such as economic and social development, human development, environmental issues and resources. I can give a simple example, our statistics on sports are mainly focusing on showing the achievements, such as number of gold medals won in Olympic Games or Asian Games. But the question is: are those indicators adequate enough to show the health condition of the people? Can we tell from the figures how many people participated in the sports activities? Should we have new indicators to reflect the balanced development of human being and the nature? It is a difficult task to set up social development indicator system to judge the coordinated development of human being and the nature. It is also an arduous task to monitor the process of urbanization; otherwise, it might bring negative impact. Therefore, the scientific viewpoint of development should be upheld for statistical work.

Thirdly, statistical work should adapt to the need of macro-regulatory measures. As for users, it is always great to have statistics as soon as possible. But here is the tradeoff, if one wants to get the data quickly, he should keep in mind that he is sacrificing the accuracy. We should have some of the sensitive indicators at hand, for instance the month-on-month price indices, which are seasonal adjusted. Data consistency is very important at the macro level, such as GDP, investment, consumption, imports and exports and so on. If we find that they are not consistent, we won’t feel at ease when we study or implement the related policies. While calculating GDP deflator, the consumer price index and price index for investment products are functioning. From macro-control perspective, data should not only be timely and accurate, but also be consistent.

Fourthly, statistical work should meet the need of the public. In the past, statistics only served for the governments, some of them were confidential. With reform and the development of market economy, the scope of decision-makers is enlarging. Governments are responsible for macro decision-making; consumers decide their consumption behavior, investors determine their investment directions. They are not only participants, but also decision-makers. Their decision-making heavily relies on the consistency of the statistics. I feelthat most of the statistics are serving for the government, as government official I do appreciate it. However, I also believe that we need to produce more indicators to meet the needs of the public.

Finally, statistical work should adapt to the need of opening to the outside world and the globalization of the economy. The world needs to know China, and China should also know about the world. I think we have more knowledge about the rest of the world as compared with their knowledge about China. Some of my foreign friends do not really know what China is doing now, how China has achieved such progress and what the difficulties are for China at the current stage. We should further improve the official news release channel to make the information more transparent, let the world better understand China. At the same time, we should follow the international rule to develop the resource of statistical information and provide statistical consultation internationally.

I have talked too much about the problems about statistical work by saying where should be improved and what kind of requirement should be met by the statistical bureau. In fact, the financial agencies are the most backward areas. Data on financial revenue are very clear, and the resource of revenue is composed of income tax, value-added tax and so on. However, in the expenditure side, our classification is quite different from that of the IMF standard. The setting of the financial statistics is basing on department management, rather than focusing on transparency, facilitating supervision and strengthening the management of each branch. For instance, the capital construction within budget is one of the major indicators of the fiscal expenditure. We know the central fiscal expenditure is 1,700 billion yuan, and the capital construction within the budget is 300 billion yuan. The problem is we don’t have detailed description of the expenditure structures. We cannot tell if the money have spent on agriculture or on irrigation works. We just allocated the money to National Development and Reform Committee. We set up this indicator merely according to the need of management. Therefore, in the aim of facilitating the technical supervision and enhancing management, we need to sub-divide this indictor. To deal with the difference of the classification system to that of the IMF, we now use a model to convert our data to IMF standard form. We are consulting with departments and ministries concerned to reform our current classification system to set of a new one that is close to international standards. As soon as we have this new system at place, we will have our financial budgetary open to the public. This is not only to follow the international trend; it is also the need of government financial management, public supervision and the management of National People’s Congress. In this regard, we need cooperate with National Bureau of Statistics, data will be released by NBS, therefore, the rest of the world can have a better understanding of China, and China will move closer to international criterion.

General speaking, the economic reform of China is step by step, and the statistical reform follows the same pattern. We have made significant progress in statistical development, yet we have encountered many difficulties. Those difficulties can only be solved through further reform and assistant and support from international organizations and foreign countries. We are open to suggestions and opinions from them, and then we will be clear in mind that what we should do and how we can achievement that goal. This can be realized through the support of Commissioner Li Deshui and joint efforts made by statistical agencies. I firmly believe that with the powerful support from all the experts and scholars participated in this symposium, in addition with the endless efforts made by statisticians, the statistical work of China will be better and better, the role of statistics will be more influential.