The German-Chinese Project on

Reorganization of Industrial and Transport Statistics

Waltraud Moore

Head of Division

Federal Statistical Office of Germany

Initiators

In 1994, in the frame of their bilateral annual talks on technical cooperation, the former called Ministry of Foreign Trade and Technical Cooperation (MOFTEC), now MOFCOM, suggested on behalf of  the Chinese Government to the Government of the Federal Republic of Germany, represented by the Federal Ministry for Economic Cooperation and Development, to initiate a joint project on the Reorganization of Industrial and Transport Statistics.

Our Chinese partners felt  that the experience which the German statistical system had gained in the course of transforming the statistical system of the former GDR to meet the requirements of a market economy could well be utilized in the German-Chinese project.

The project was two thirds financed by MOFCOM, and one third by the Federal Ministry for Economic Co-operation and Development.

On the German side, the project was supervised by the German Technical Co-operation Agency GTZ. The GTZ is a public enterprise for sustainable development with worldwide  operations.

Project Partners

In 1996, the Federal Statistical Office of Germany and the National Bureau of Statistics of the PR of China as the project partners, started the joint project on the Reorganization of Industrial and Transport Statistics.

The Federal Statistical Office and the National Bureau of Statistics  already had a history of close co-operation and, thus, we were able to build on an existing partnership.  The project contributed  in a significant way to intensifying these already existing bilateral contacts.

Initial Situation

At the time of the project start, the transformation of the Chinese economy was already well underway. In order to keep track of the dynamic development of the Chinese economy, the Chinese statistical system had to meet a number of great challenges:

Here are only a few examples:

Rapid changes were occurring in the production and transport sectors. New companies were forming, other sectors of the production industry were on the decline. New types of ownership were emerging. An ever growing spectrum of new products was reaching the market. Market prices emerged instead of the formerly fixed pricing system. In addition, the Chinese economy was in the process of becoming a global player as China’s international economic contacts were on a dynamic increase.

Thus, the Chinese statistical system had to reorganize its structures, methods and procedures to supply economic policy makers with timely, reliable and internationally comparable data. The project was designed to respond to these new demands. The overall goal was : The results of industrial and road traffic statistics meet the needs of China’s economic system.

In order to reach this ambitious goal, the project was structured into three phases. An elaborate system of objectives and criteria of goal achievement was established in a joint planning session by the representatives of the NBS, the FSO and the GTZ. In addition, mechanisms and procedures of monitoring goal achievement were installed. Each of the 3 project phases was subject to  a separate evaluation of goal achievement.  The results of each project activity were evaluated in terms of their  contribution to goal achievement. The project managers of both sides, NBS and FSO, met regularly to discuss the progress and, to decide on adjustments if necessary.

Instruments

Let me now give you some overall information on the components of the project and on the inputs that were given to achieve the project objectives.

Major components of the project were  the redesign of the survey instruments,  the introduction of the relevant international classifications of economic activities and of goods by means of electronic conversion tables, the installation of a business register on the provincial and national level,  and the further transition from full coverage to sample surveys.

Together with the introduction of these new infrastructural instruments there was an organizational restructuring at the NBS because the respective units of the Chinese statistical system had to intensify their co-operation and to co-ordinate their work to a greater extent than before

Methods

The second project component was the introduction and adaption of new methods as required by international statistical standards. Here the focus was on short-term economic statistics and on improvements to the System of National Accounts which the NBS had already started to implement several years prior to the project start. The introduction of short-term economic statistics served two purposes:

 to enable economic policy makers and other users of economic statistics to observe the rapid development of the Chinese economy in the production sector and to make respective adjustments on the macro-steering level

to broaden the information basis for computing the GDP and the production  of quarterly GDP results.

In addition, new methods for road traffic counts were  introduced in order to enable road planners on the national and regional level to adjust the road infrastructure to  the increasing density of traffic caused by the rapidly growing number of vehicles

Activities

Now I come to the inputs: In the course of the project which was the largest co-operational project ever conducted by the Federal statistical Office to date, 48 consulting and training activities were conducted in Germany and in China. More than 500 statisticians from both countries participated in the activities. The objective of the training measures was to train the trainers, i.e. the participants of our training activities were expected to pass their knowledge on to their colleagues at the NBS and the provincial offices.  On the German and on the Chinese side, statisticians from the central and  from the regional offices were involved in the activities. In some instances, experts from other German national agencies, such as the Central Bank,  the Federal Institute of Road Transport  and the Federal Vehicle Administration were involved. There was usually a certain sequence or choreography of activities: Each major topic to the project was initiated by a mission of senior staff from the NBS. The objective of the mission was to get acquainted with the leading experts on the German side and to lay the ground for the coming activities. The mission was usually followed by a training course for 20 Chinese statisticians in Germany. Then there were consulting missions by the German experts on the preparation and evaluation of pilot surveys, on questionnaire design, survey methods and techniques, just to name a few topics. A number of methodological documents and handbooks were translated into Chinese by experienced translators specializing in statistics and economics. As mentioned before, the regular - i.e. yearly - assessments of project activities were essential in monitoring the progress of the project. In addition, they served to  identify necessary adjustments to the project components in each project phase. The extensive project documentation was very helpful in ensuring the coherence of the various inputs. It also served to familiarize new experts with the results of previous project activities.

Classifications of Activities and Goods

Now I will describe the instrumental components of the project in more detail, starting with the classifications of economic activities and goods of the production sector. Any enterprise can be classified by its main economic activity, while the goods it produces can also be categorized in more or less detail. As mentioned before, there was the challenge to observe newly emerging economic phenomena: to observe the increasing diversification or specialization in terms of economic activities and in terms of goods produced. For this, the Chinese statistical system needed to adopt a new language: the classifications of economic activities and goods as established by the United Nations. This common statistical language is also the basis for comparing the results of Chinese production statistics with   data from other countries. In addition, the classifications are an important element of the conceptual frame of the UN System of National Accounts. The adaption of the UN statistical classifications had to be a gradual process because, at the same time, the old information needs still had to be met. An abrupt change-over to the new classifications at the expense of continuity had to be avoided. The project work took these aspects into account. There was a stepwise approach.  In the process of work, the statisticians of the comprehensive department of the NBS which is responsible for conceptual and cross-sectional matters, of the department responsible for production statistics, and of the National Accounts department  came to co-operate very closely and to co-ordinate their activities. For this purpose, already at an early stage of the project, the involved departments organized task teams. This was an important step to achieving better communication and transfer of information among the concerned organizational units of the NBS and, thus, an essential contribution to the success of the project.

As a concrete result of the project, so-called correspondence-tables were developed by which the results of the Chinese production surveys were re-aggregated or „translated“ into the categories of the International Standard Industrial Classification (ISIC), that is the classification of economic activities,  of the UN. The correspondence-tables allow survey data to be electronically converted from the Chinese classification system to the ISIC. Thus, China now uses the ISIC for all production statistics as it reports them to international organizations such as the UN or the OECD. In addition, the ISIC is used in China’s statistical publications.

In a second step, the Central Product Classification of the UN was adapted to Chinese requirements. Together with the use of the ISIC, the adaptation of the CPC to Chinese requirements allows the international comparison  of production results as they reflect market developments within the various sectors of economic activity and, thus, provides a basis for the international comparison of structural or technological  developments in the production sector as a whole

Building a Business (Enterprise) Register

The second infrastructural instrument of  importance for the project was the business register. Modern statistical systems need to establish  business registers for a number of purposes. Business registers which usually  include the name and address of a business together with a number of important characteristics such as for example type of ownership, employment size, and  type of economic activity, are used as a sample frame for stratified sample surveys. It is also possible to conduct ad-hoc counts/surveys solely on the basis of registers. The use of registers gives the statistical offices quick access to their survey population, it is more efficient  and cost-saving and it can reduce the burden on respondents.

The quality of a register depends on regular updates which can be done by using a variety of sources such as tax information, legal registration records. Major updates of the business register are achieved by industrial census. 

It is a great challenge for a large country like China to establish business registers on the regional level and to keep them updated in view of the extremely rapid  developments of the Chinese economy.

When the project started in 1996, the business registers were already in the process of being established based on the industrial census of 1995. The registers were decentralized, that means that they were run by the Statistical Offices of the provinces and large municipalities.

In the course of the project, the NBS established two central register databases which comprised 165 000 large and the 5 000 very largest  production businesses in terms of revenue. By the end of the project, the two central registers were in regular use for ad-hoc surveys by the NBS and for short-term production statistics.

Sample Surveys

Another major instrument for modern production statistics is the use of sample surveys instead of  total counts. The predominant use of sample surveys instead of  total counts is one of the characteristics of  statistical systems which are oriented to market economies. Sample surveys are more flexible in terms of content and timing than full counts. They are also more efficient because the costs for data collection and processing are lower. Last but not least, sample surveys reduce the response burden because only a relatively small group of the total population has to be involved.  If the correct sampling methods and procedures are applied, the results of sample surveys are as accurate as the results of total counts.

The objective of this project component  was to regularly conduct monthly sample surveys on production, sales and employment on the regional and on the central level.

As a result of the project work, the Chinese statistical system now produces country-wide monthly results on the production, sales and employment of medium and small businesses in addition to the results derived from the monthly surveys of large businesses which are based on the central registers described before. In this way, monthly data are collected on the entire production sector.  The statisticians in charge of production statistics on the national level as well as on the provincial level apply the standard sample methodology and use it for regular and ad-hoc surveys. To this purpose, a manual has been jointly elaborated which is now in use in all provincial offices and in the NBS.

Short-term Business Indices

Besides the establishment of new instruments, the introduction of new statistical methods  was another major task of the project. Foremost, this meant the introduction of the methods for calculating short-term indices on the basis of the afore-mentioned monthly surveys. Short-term indices are needed to observe economic developments. They are a necessary information basis for the monitoring of economic policies and for respective decision-making. They are also an essential input for quarterly GDP estimates.

While the indices were initially produced on a volume basis, the Chinese statistical system made the transition from volume-based indices to price-based indices during the second phase of the project. At the same time, the concept and methods of seasonal adjustments were introduced and applied.

The objective was the monthly calculation of production and sales indices based on the international methodological standards.

The results of this project component well surpassed the objectives, in that the NBS now presents monthly indices on production, sales of the production sector, incoming orders and stock inventory. In addition, the NBS computes a monthly producer price index. The monthly production indices are based on a survey of approx. 165 000 large businesses and of the 5 000 largest businesses which together account for about 90% of the total production sector.

System of National Accounts

Although the improvement of  the  national accounts was not an explicit objective of the project, most of the project components served to improve the calculation of the GDP according to the international standards set by the System of National Accounts, a standard  system of concepts and methods established by the UN. As the national accounts encompass the production and consumption of all economic sectors, improvements in the statistical base, i.e. in the statistical data collection and methodology of any economic sector, contribute ultimately to a more accurate and timely computation of the GDP.

It is one of the greatest challenges for the statistical system of a transition country to make the change from the Material Product System which was used by all countries with planned economies, to the System of National Accounts which is used by all countries with market economies. Any international comparison of overall economic performance between countries are only possible on the basis  of  GDP calculations according to the SNA.

Our project on the reorganization of industrial and road transport statistics has contributed to the improvement of GDP calculations in the following way:

Value-added concepts were introduced to production statistics and, thus, transported into the GDP calculations. For this purpose, the cost-structure of production businesses was surveyed and analyzed.

The introduction of short-term production statistics has improved the basis for quarterly GDP estimates.

The  introduction of seasonal adjustment methods for the calculation of production and producer price indices has also benefited the GDP calculations where these methods are applied likewise.

Road Traffic Counts

Turning to the second topic of the project, the improvement of road traffic statistics, it has to be stated, that the original aim was too ambitious. The terms of reference had, thus to be down-sized to focus on road traffic counts. However, besides this central topic, the environmental aspects of road traffic, safety issues of road traffic and the establishment and operation of a register of automotive vehicles  were treated in training and consultation activities. 

The observation and statistical recording of the volume and the direction of traffic provides the information base for road planning and respective environmental policy decisions. 

In order to achieve the objective of transmitting the methods and practical procedures of road traffic counts, the NBS was equipped with the requisite mobile survey units. A consultant to the German Federal Ministry of Transport was  in charge of  respective consultations in China. And a seminar was held in Germany for 21 participants from the NBS and other involved public agencies and ministries on the topic of road transport statistics.

As a result of the project work, the standard methods and practical procedures of manual and electronic traffic counts have been imparted to our Chinese colleagues, and pilot surveys have been conducted in several parts of the country

Project Evaluation

In conclusion it can be stated that the joint project work has been very successful in that it has contributed to the improvement of the timeliness, the reliability and the international comparability of Chinese  statistics.

While the statistical system has benefited from the co-operation, this can also be said about  the co-operants. All involved statisticians, experts,  project managers and supervisors, have gained professional experience,  respect and better knowledge of the culture and ways of their counterparts and an experience of true partnership. As for the German statisticians, they have gained  something else in addition: a lasting appetite for the best food in the world: the Chinese cuisine.