Explanatory Notes on Main Statistical Indicators

Gross Domestic Product (GDP) refers to the final products at market prices produced by all resident units in a country (or a region) during a certain period of time. Gross domestic product is expressed in three different forms, i.e. value, income, and products respectively. GDP in its value form refers to the total value of all goods and services produced by all resident units during a certain period of time, minus the total value of input of goods and services of the nature of non-fixed assets; in other term, it is the sum of the value-added of all resident units. GDP in the form of income includes the income created by all resident units and distributed to resident and non-resident units. GDP in the form of products refers to the value of all goods and services for final consumption by all resident units minus the net exports of goods and services during a given period of time. In the practice of national accounting, gross domestic product is calculated with three approaches, i.e. production approach, income approach and expenditure approach, which reflect gross domestic product and its composition from different aspects.

Gross National Income (GNI) also known as gross national product, refers to the final result of the primary distribution of the income created by all the resident units of a country (or a region) during a certain period of time. The value-added created by the resident units of a country engaged in production activities is distributed, during the primary distribution, mainly to the resident units of that country, while part of it is distributed to the non-resident units in the form of production tax and import duties (minus subsidies to production and import), remuneration for the labourers and property income. At the meantime, a part of the value-added created abroad is distributed to the resident units of the country in the form of production tax and import duties (minus subsidies to production and import), remuneration for the labourers and property income. The concept of gross national income is thus developed, which equals to the gross domestic product plus the net factor income from abroad. Unlike the gross domestic product which is a concept of production, the gross national income is a concept of income.

Three Industries Classification of economic activities into three branches of industries is a common practice in the world, although the grouping varies to some extent form country to country. In China economic activities are categorized into following industries:

Primary industry: refers to agriculture, forestry, animal husbandry and fishery.

Secondary industry: refers to mining and quarrying, manufacturing, production and supply of electricity, water and gas, and construction.

Tertiary industry: refers to all other economic activities not included in primary or secondary industry.

Labourers Remuneration refers to the whole payment of various forms earned by the labourers from the productive activities they are engaged in. It includes wages, bonuses and allowances the labourers earned in monetary form and in kind. It also includes the free medical services provided to the labourers and the medicine expenses, traffic subsidies and social insurance, housing fund paid by the employers. As the individual economy is concerned, since the labourers remuneration is not easily distinguished from the operating profit, both are treated as labourers remuneration.

Net Taxes on Production refers to the difference of the taxes on production minus the subsidies on production. The taxes on production refers to the various taxes, extra charges and fees levied on the production units on their production, sale and business activities as well as on the use of some factors of production, such as fixed assets, land and labour force in the production activities they are engaged in. In contrast to the taxes on production, the subsidies on production refer to the unilateral government transfer to the production units and are therefore regarded as negative taxes on production. They include subsidies on the loss due to implementation of government policies, price subsidies, etc.

Depreciation of Fixed Assets refers to the depreciation of fixed assets of a given period, drawn in accordance with the stipulated depreciation rate for the purpose of compensating the wear loss of the fixed assets or the depreciation of fixed assets calculated in a fictitious way in accordance with the stipulated unified depreciation rate in the national economic accounting system. It reflects the value of transfer of the fixed assets in the production of the current period. The depreciation of fixed assets in various enterprises and institutions managed as enterprises refers to the depreciation expenses actually drawn. In government agencies and institutions not managed as enterprises which do not draw the depreciation expenses, as well as for the houses of residents, the depreciation of fixed assets is the imputed depreciation, which is calculated in accordance with the stipulated unified depreciation rate. In principle, the depreciation of fixed assets should be calculated on the basis of the re-purchased value of the fixed assets. However, there is no actual condition to re-evaluate all the fixed assets in China. Therefore, the above-mentioned methods are temporarily adopted at present.

Operating Surplus refers to the balance of the value added created by the resident units deducting the labourers remuneration, net taxes on production and the depreciation of fixed assets. It is equivalent to the business profit of the enterprises plus subsidies on production, but the wages and welfare expenses paid from the profits should be deducted.

GDP by Expenditure Approach refers to the method of measuring the final results of production activities of a country (region) during a given period from the perspective of final use. It includes final consumption expenditure, total capital formation and net export of goods and services, i.e.:

GDP by expenditure approach = final consumption expenditure + total capital formation + net export of goods and services

Final Consumption Expenditure refers to the total expenditure of resident units for purchases of goods and services from domestic economic territory and abroad to meet the requirements of material, cultural and spiritual life. It excludes the expenditure of non-resident units on consumption in the economic territory of the country. The final consumption expenditure is broken down into household consumption expenditure and government consumption expenditure.

Households Consumption Expenditure refers to the total expenditure of resident households on the final consumption of goods and services. In addition to the consumption of goods and services bought by the households directly with money, the households consumption expenditure also includes expenditure on goods and services obtained by the households in other ways, i.e. the so-called imputed consumption expenditure, which includes the following: (a) the goods and services provided to the households by the employer in the form of payment in kind and transfer in kind; (b) goods and services produced and consumed by the households themselves, in which the services refer only to the owner-occupied housing and domestic and individual services provided by the paid household workers; (c) financial intermediate services provided by financial institutions; (d) insurance services provided by insurance companies.

Government Consumption Expenditure refers to the expenditure on the consumption of the public services provided by the government to the whole society and the net expenditure on the goods and services provided by the government to the households free of charge or at low prices. The former equals to the output value of the government services minus the value of operating income obtained by the government departments. The latter equals to the market value of the goods and services provided by the government free of charge or at low prices to the households minus the value received by the government from the households.

Total Capital Formation refers to the fixed assets acquired minus those disposed of and the net value of inventory, including the total fixed capital formation and the increase in inventory.

Total Fixed Capital Formation refers to the value of fixed assets acquired minus those disposed of during a given period. Fixed assets are the assets produced through production activities with specified unit value which could be used for over one year, excluding natural assets. Total fixed capital formation can be categorized into total tangible capital formation and total intangible capital formation. The total tangible capital formation include the value of the construction projects, installation projects completed and the equipment, apparatus and instruments purchased as well as the value of land improved, the value of draught animals, breeding stock, animals for milk, wool and for recreational purpose, and the newly increased forest with economic value during a given period. The total intangible capital formation includes the prospecting of minerals, the acquisition of computer software minus the disposal of them.

Increase in Inventory refers to the market value of the change in inventory of resident units during a given period, i.e. the difference of value between the beginning and the end of the period minus the current gains due to the change in prices. The increase in inventory can be positive or negative. A positive value indicates the increase in inventory while a negative value indicates the decrease in stock. The inventory includes the raw materials, fuels and reserve materials purchased by the production units as well as the inventory of finished products, semi-finished products, work-in-progress, etc.

Net Export of Goods and Services refers to the difference of the exports of goods and services minus the imports of goods and services. The imports include the value of various goods and services sold or gratuitously transferred by the resident units to the non-resident units. The imports include the value of various goods and services purchased or gratuitously acquired by the resident units from the non-resident units. Because the provision of services and the use of them happen simultaneously, the acquisition of services by the resident units from abroad is usually treated as import while the acquisition of services by non-resident units in this country is usually treated as export. The export and import of goods are calculated at FOB.

Direct Input Coefficient refers to the volume of products and services of industry i, which is consumed directly by industry j in the course of its production or business, recorded as a_ij (i,j=1,2, … ,n). The direct input coefficient table or direct input coefficient matrix, usually denoted as A, is a table that presents direct input coefficients of all industries.

Total Input Coefficient refers to the volume of products and services of industry i which is consumed directly and indirectly by industry j in producing each unit of final use. The total input coefficient table or total input coefficient matrix, usually denoted as B, is a table that presents total input coefficients of all industries.

Institutional Units refer to economic entities that are in a position to own assets and incur liabilities, to engage independently in economic activities, and to conduct transactions with other entities.

Institutional Sectors refer groups of institutional units that are homogenous in nature. Following 4 institutional sectors are identified in the flow of fund accounts: non-financial corporations, financial institutions, governments and households, Also treated as an institutional sector is the rest of the world, which is composed of non-resident units that have economic relations with the resident units.

Non-Financial Corporations and the Sector of Non-Financial Corporations Non-financial corporations refer to resident corporations that are engaged in the production of goods and the provision of non financial services in the market, mainly covering corporate enterprises of various types engaged in the above-mentioned activities. All non-financial corporations make up the sector of non-financial corporations.

Financial Institutions and the Sector of Financial Institutions Financial institutions refer to resident institutions that are engaged in the financial intermediate services or auxiliary financial activities that are closed related with financial intermediate services, mainly covering central banks, commercial banks, policy-related banks, non-banking credit institutions and insurance companies. All financial institutions make up the sector of financial institutions.

Government Units and the Sector of Governments Government units refer to legal entities and their auxiliary units within the territory of China that are established through political process and are empowered with legislative, administrative or judicial rights over other institutional units in a given region. The main function of government units is to acquire funds through taxation or other means, to provide public services to the society and households, and to conduct redistribution of income and properties of the society through transfer payment. Government units cover mainly administrative and non-profit institutional units of various types. All government units make up the sector of governments.

Households and the Sector of Households Households refer to resident individuals or groups of resident individuals who share common living facilities, pool together entire or part of their income and properties at their common disposal, and share their housing, food and other consumer goods and services. All households make up the sector of households.

Non-resident Units and the Rest of the World Non-resident units refer to of units that are of a non-resident nature. All non-resident units that have transactions with resident units make up the sector the rest of the world.

Total Income of Primary Distribution Primary distribution refers to the distribution of net results from production activities among the owners of factors of production and the governments. Factors of production include labour force, land and capitals. Owners of labour force gain remuneration by providing labour. Owners of land receive rents from leasing of land. Owners of capitals get income of various forms depending on the type of capitals: bankers receive income from interest and share holders receive dividends or non-distributed profits. Governments either gain production tax or pay for subsidies by participating directly or indirectly in the production process. Results of primary distribution generate the total income of primary distribution of each sector, and the sum of the total income of primary distribution of all sectors make up the gross national income, or the gross national product.

Current Transfers Transfer refers to the transaction of provision of goods, services or assets by an institutional unit to another institutional unit without receiving any goods, services or assets in return from the recipient. Current transfers refer to all kinds of transfers other than capital transfers, including income tax, payment to social securities, social allowances and other current transfers.

Total Disposable Income Total income of primary distribution is re-distributed through current transfer, resulting in the total disposable income of various institutional sectors. The sum of total disposable income of all institutional sectors makes up the total national disposable income.

Total Savings refer to the total disposable income minus the final consumption. Total savings of all sectors make up the total national savings.

Capital Transfer refers to the free payment from one sector to another sector for non-financial capital formation, and is a transaction that seeks no return from the recipient. The capital transfer differs from the current transfer in 2 aspects: 1) The purpose of the capital transfer is investment rather than consumption. 2) The capital transfer features the transfer of the ownership of the assets other than inventory and cash, and the capital transfer in its monetary form involves the disposal of assets other than inventory. Capital transfer includes investment subsidies and other capital transfers.

Net Financial Investment reflects the surplus or shortage of capitals of institutional sectors or of the economy in general. It refers to total savings plus the income from capital transfer minus payment for capital transfer and the non-financial investment from the point of view of physical transaction. In terms of monetary transaction, it is the difference between the increase in financial assets minus the increase of the financial liabilities.

Currency in Circulation refers to currency that is in circulation in the market, including local and foreign currencies.

Deposits refer to credit transactions by which financial institutions accept deposits from clients who could withdraw their deposit at any time or by agreed time frame. They include current deposit, fixed deposit, household savings deposit, government deposit, foreign exchange deposit and other deposits.

Loans refer to credit transactions by which financial institutions lend their capital to clients at certain level of interest rates, which the latter will repay by agreed time frame. They include short-term loans, medium and long-term loans, government loans, foreign exchange loans and other loans.

Securities (excluding stocks) refer to written certificates representing creditors’ rights, purchased by bond holders or owned by selling products, which can be transacted at the financial markets. They include government bonds, financial bonds, corporation bonds, commercial drafts, preferential stocks that provide fixed income without the right to share the residual value of corporations, etc.

Stocks and Other Holding Rights refer to the rights by stockholders and direct investors on the net assets of corporations they invested in. Stocks refer to negotiable securities on creditor’s rights, issued by stock companies certifying the investment by stockholders and their rights and duties depending on their stocks. Other holding rights refer to the direct investment by institutional units to other units in forms other than stocks and negotiable securities on creditor’s rights, including tangible assets such as land, buildings, machines and equipment, inventory, resources, etc., and intangible assets such as trade marks, patents, rights on land use, licenses, commodity credit, and the capitals. Documents on holding rights usually include certificates on creditor’s right, certificates on investment or on participation, etc.

Insurance Reserve Funds refer to reserve fund for life insurance, the net pension fund, advance payment of premium and non-claimed reserves.

Settlement Fund refers to bank fund of financial institutions for settlement that is in the process of remittance.

Transactions Between Financial Institutions refer to flow of capital between financial institutions, including inter-bank deposits and loans.

Reserve Funds refer to savings of financial institutions in the central bank and designated reserves to the central bank.

Loans from the Central Bank refer to loans from the central bank to financial institutions.

Current Account includes goods, services, earnings and current transfers.

Import and Export of Goods refer to imported or exported goods through Chinese customs. Both import and export of goods are valued at free on board (f.o.b.) prices. Free on board prices can be regarded as the purchaser’s prices paid by importers when claiming goods at the boarder of the exporters. When the importer claim the imported goods, the goods have been loaded in importer’s carriers or other carriers, and the exporter has paid export duty or received export redeem.

Import and Export of Services refers services provided between resident and non-resident units, including services on transportation, tourism, communications, construction, insurance, banking, computer and information, consultation, advertisements and publicity, as well as film, audio and video services, royalty for patents, trademarks and other special rights, other commercial services, and government services.

Earnings refers income from provision of factors of production between resident and non-resident units, including compensation of labours and earnings from investment. Earnings from investment include earnings from and expenses on direct investment, security investment and other investment, as well as reinvestment of earnings from direct investment.

Capital Account includes capital transfers such as immigration transfer, reduction or exemption of debts, etc..

Financial Account includes direct investment, security investment and other investments.

Direct Investment refers to investment by foreign investors or investors from Hong Kong, Macao and Taiwan in China, or by Chinese investors in foreign countries or in Hong Kong, Macao and Taiwan, in forms of exclusive investment, joint investment, contracted operation and cooperative development,.

Security Investment refers to the issue of stocks and securities by China in foreign countries or in Hong Kong, Macao and Taiwan, and the purchase by Chinese units of stocks and securities issued in foreign countries or in Hong Kong, Macao and Taiwan.

Other Investment refers to all external transactions on financial assets and liabilities other than direct investment and security investment, including trade credits, loans, currency, savings and other assets, provided by foreign countries to China and by China to foreign countries.

Reserve Assets, Net Increase refers to the net balance between the end of the reference year and the end of the previous year, in the gold reserve, foreign exchange reserve, special drawing rights in the International Monetary Fund, and the use of the Funds credits. The increase in the reserve assets is expressed in negative figure and the decrease in the reserve assets is expressed in positive figure.