Price Indices

I. The data on the price indices in this chapter show the changing trend and the change rates in production, circulation, consumption and investment, etc., including mainly consumer price indices of residents, retail price indices, price indices of agricultural means of production, purchasing price indices of farm products, producers price indices of industrial products, and price indices of investment in fixed assets.

II. The statistics of price indices is organized by the Urban Socio-economic Survey Organization, NBS. The urban socio-economic survey organizations of the provinces, autonomous regions and municipalities directly under the central government as well as the urban socio-economic survey organizations of the selected cities and counties collect statistical data from the grassroots units in accordance with the scheme of price survey stipulated by the NBS, tabulate them and report them to the higher agencies.

III. The data for calculation of the consumer price indices of residents and the retail price indices in China are collected with the stratified sampling method. Areas distributed in different economic regions are selected as the sample areas and the representative commodities are selected as the sample commodities. Regular surveys are conducted to collect the data on the market prices. The data on the population are estimated on the basis of the sample. At present, 226 cities and counties have been selected for this purpose. Following are major steps in the process of calculation of the price indices:

(1) The selection of the areas and places for survey: Based on such principles as regional economic features and reasonable geographic distribution, representative sample areas for the national survey are selected which include large, medium and small cities and counties. When the sample areas are selected, large-scale shops and markets (including fairs) with great varieties of commodities are selected as the survey places.

(2) The selection of the representative commodities and their specifications or varieties: The representative commodities are the commodities consumed in large quantity and representative in price changes. The representative specifications or varieties are determined according to the data on the retail sales of commodities and the account data of the residents of 40,000 urban households and 67,000 rural households, following the related instructions for selection. In principle, only those specifications or varieties of the commodities can be selected: (a) They are closely related to the social production and people's livelihood; (b) They are sold in large quantities (or big values); (c) The market supply is stable; (d) The changes of their prices are representative in trend; (e) There is great difference among the specifications or varieties selected.

(3) Survey way: Enumerators are sent to the survey places to take the records of the prices. Nearly 10 thousand assistant enumerators are invited to assist the survey work.

(4) The determination of the weights: The weights for calculation of the retail price indices are determined according to the total retail sales of commodities. The weights for calculation of the consumer price indices are determined according to the composition of the consumption expenditures of more than 100,000 urban and rural households.

IV. Producers price of industrial products refer to the first sale price of industrial products. The survey ways include the key units survey and typical units survey. The key units refer to the industrial enterprises with annual sale revenue above 5 million yuans. The typical units refer to the industrial enterprises with annual sale revenue below 5 million yuans.

(1)The principle to select the representative enterprises:

(a) The survey enterprises are selected by industrial sectors. In principle, every branch should have survey enterprises; (b) All (or a majority of) large-sized enterprises should be selected; (c) The normal enterprises with stable production are listed as survey object; (d) Different types of ownership should be considered in selecting enterprises.

(2) The principle to select the representative products:

(a) The survey products are selected by industrial sectors; (b) The products are relative with national economy and the people's livelihood; (c) The products are more stable in production; (d) The foreground of products is representative in trend; (e) The products are typical and with local color.

There are 1386 kinds (including 3000 specifications or varieties) of industrial products listed in Industrial Products Content on Price Survey at present. The industrial sale value (or purchasing value) of these branches represented by these products is more than 70 percent of nationwide industrial sale value (or purchasing value).

(3) Price survey way: Enterprises reporting way is adopted. Nearly 20 000 industrial enterprises report the above data every month.

(4) The determination of the weights: The weights for calculation of the producers' price indices of industrial products are determined according to the total sales value of industrial products. The weights will replace every five years. The data for calculation root from industrial census. If there are not industrial census data recently, industrial statistical data and department statistical data will be used to estimate the weights.

V. The price survey of investment in fixed assets is not a kind of comprehensive survey. Data are collected by the survey on key units and typical units. The prices of the survey of investment in fixed assets are the actual purchasing prices or balancing prices of entity of investment in fixed assets. The survey content includes the gross output value of construction, the prices of main construction materials that composing the architecture engineering entity in the year, such as steel, timber, cement, local construction materials (such as brick, tile, calcareousness, sand, stone, etc.), chemical materials (such as oil paint, etc.) , the price of labor force as live laboring input, the standard of various fees, the purchasing price of equipment, tools and instruments and the prices of others investments.

The following principle to select the sample of price survey of investment in fixed assets should be followed.

(1) The principle to select the prices survey point of construction and installation: (a) Sample units should be a certain coverage; (b) The economic activity of investment is great representative; (c) Different economic types of ownership should be considered; (d) The key projects need to be selected; (e) Give attention to both various branches and types of project.

(2) The principle to select the prices survey point of others investments: The principle to select the prices survey point of others fees is general the same as that of construction and installation, especially to select the projects with great investment value. Since it is not easy to obtain the other fees, it should do the key survey on the construction owner units and building units assisted with typical survey (gotten from the administration department), in the actual operation.

(3) Price survey way: Enterprises reporting system is used together with the enumerators visiting method.

(4) The determination of the weights: The weights for calculation of the price indices of investment in fixed assets are determined according to the average proportion of construction and installation, purchase of equipment, tools and instruments and others investment in the 3 previous years.

VI. The price indices for real estate.

The real estate in broad sense refers to the property in terms of buildings and land. Therefore, the price survey on real estate covers the following items:

1) Prices for selling houses and buildings. In terms of the types of houses sold at the market, prices for selling houses include the prices for commercial houses, for houses built or purchased by various units and for privately owned houses.

2) Prices for renting houses and buildings. Included in this category are prices for renting residential housing, office buildings, commercial buildings and warehouses.

3) Prices for land transaction. Included in this category are prices for the transaction of land used for residential housing, for industrial purposes, for commercial or recreational purposes and for other uses.

Survey on real estate prices involves the following steps:

1) Conducting surveys to collect price information on sales or leasing of houses and buildings and obtain average prices.

2) Compiling price indices related with economic activities such as sales and leasing of houses and buildings and land transaction, in order to reflect the direction and scale of changes in the prices of real estate transaction.

3) Conducting statistical analysis on key indicators such as the size, scale and efficiency of investment in real estate activities, in order to reveal new issues and problems and to serve the decision-making process by the governments.

4) Serving the economic construction and the market economy by regular dissemination of information on real estate prices to the public.

At present, the real estate markets are concentrated in large and medium cities. It is estimated that the investment in the sector of real estate development in 35 large and medium cities takes up over 70% of the real estate investment for the whole country. On the other hand, there is no statistics on real estate development activities in the rural areas. The national survey on real estate prices, for the time being, is conducted only in 35 large and medium cities, with a sample of 6,000 units. Provincial surveys on real estate prices are conducted in a dozen of provinces, including Shaanxi, Hunan, Shangdong and Shanxi.

Real estate price survey employed a combination of survey of key units and survey of typical cases. Data are collected through reporting forms supplemented by interviews.

To ensure the quality of the survey, data on prices, quantity and transaction value are collected on monthly basis. Quarterly data on quantity and transaction value are obtained by adding the actual value and quantity of transaction for the 3 months during the quarter, and quarterly data on prices are taken as the arithmetic mean of the prices for each of the 3 months in the quarter.

It is difficult to obtain base year prices as transaction in real estate is typically a one-time transaction. In conducting real estate price survey, therefore, it is important to maintain the consistency of statistical definition and standards in terms of the type, location and structure of the houses and buildings under survey to ensure the comparability of prices for the base year and the reference year. When the base-year prices are not available, reporting should be made in accordance with the approaches provided in the survey manual.

Price indices for real estate include price indices for selling houses and buildings, price indices for leasing houses and buildings and price indices for land transaction. The methods for the compilation of the three sets of indices are similar in that they all use bottom-up approach, under which indices for the item groups are compiled first, and then indices for the major groups, categories, major categories and finally the overall indices are compiles. The indices for item groups, major groups and categories are calculated using the formulae of weighted harmonic mean with sample data as the weights, and the indices for the major categories and the overall indices are calculated using the arithmetic mean with fixed weights.