Explanatory Notes on Main Statistical Indicators

Gross Domestic Product (GDP)  refers to the final products produced by all resident units in a country  during a certain period of time. Gross domestic product is expressed in three different perspectives, namely value, income, and products respectively. GDP in its value perspective refers to the balance of 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 words, it is the sum of the value-added of all resident units. GDP from the perspective of income refers to the sum of all kinds of revenue, including Compensation of Employees, Net Taxes on Production, Depreciation of Fixed Assets, and Operating Surplus. GDP from the perspective of products refers to the value of all goods and services for final demand by all resident units plus the net exports of goods and services during a given period of time. In the practice of national accounting, gross domestic product is calculated from three approaches, namely production approach, income approach and expenditure approach, which reflect gross domestic product and its composition from different angles.

For a region, it is called as Gross Regional Product(GRP) or regional GDP.

Gross National Income (GNI)  originally known as Gross National Product(GNP), refers to the final result of the primary distribution of the income created by all the resident units of a country 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 (minus subsidies to production), compensation of employees and property income. In 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 (minus subsidies to production), compensation of employees and property income. The concept of Gross National Income is thus developed, which equals to Gross Domestic Product plus the net income from initial distribution from abroad. Unlike GDP which is a concept of production, GNP is a concept of income.

Three Strata of Industry  Classification of economic activities into three strata of industry is a common practice in the world, although the grouping varies to some extent from country to country. In China, according to Industrial classification for National Economic Activities (GB/T 4754—2011) and Dividing Basis of Three Industries, economic activities are categorized into the following three strata of industry:

Primary industry refers to agriculture, forestry, animal husbandry and fishery industries (not including services in support of agriculture, forestry, animal husbandry and fishery industries).

Secondary industry refers to mining and quarrying(not including support activities for mining), manufacturing(not including repair service of metal products, machinery and equipment), production and supply of electricity, heat, gas and water, and construction.

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

Compensation of Employees  refers to the total payment of various forms to employees for the productive activities they are engaged in. It includes the employees earn in cash or in kind. It mainly include: wages, bonuses and allowances, subsidies, social insurance paid by company or unit for its staff, supplementary social insurance, housing fund, the pension for the employees of the administrative institution, other forms of welfare and remuneration provide by the units for its employees.

Net Taxes on Production  refers to taxes on production less 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 etc. in the production activities they are engaged in. Taxes on production are divided into product tax and other kinds of taxes on production, product tax mainly includes: value-added tax, consumption tax, import duty, export duty; other taxes on production mainly include: House Property Tax, Tax on Vehicles and Boat Operation, Urban Land Use Tax, etc. In contrast to taxes on production, subsidies on production refer to the payment by the government for free to the production units to influence production activities of production units such as production, sales and pricing, which include agricultural production subsidies, subsidies for policy losses, import subsidies, etc. Subsidies on production are therefore regarded as negative taxes on production.

Depreciation of Fixed Assets  Refers to the decline of the value of fixed assets due to natural deterioration, normal elimination or loss, it reflects the value of transfer of the fixed assets in the production of the current period. In principle, the depreciation of fixed assets should be calculated on the basis of the re-purchased value of the fixed assets.

Operating Surplus  refers to the balance of the value added created by the resident units after deducting the labourers remuneration, net taxes on production and the depreciation of fixed assets.

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 uses. It includes final consumption expenditure, gross capital formation and net export of goods and services. The formula for computation is.:

GDP by expenditure approach = final consumption expenditure + gross 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 both the domestic economic territory and abroad to meet the needs of material, cultural and spiritual life. It does not include 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.

Household 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 household consumption expenditure also includes expenditure on goods and services obtained by the households in other ways, i.e. the latter so-called imputed consumption expenditure, which mainly includes: (a) the goods and services provided to households by employers in the form of payment in kind and transfer in kind; (b) goods and services produced and consumed by the households themselves (such as self produced agricultural products); (c) financial intermediate services provided by banking and insurance institutions.

Government Consumption Expenditure  refers to the consumption expenditure spent for the provision of public services provided by the government to the whole country and the net expenditure on the goods and services provided by the government to households free of charge or at reduced 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 reduced prices to the households minus the value received by the government from the households.

Gross Capital Formation  refers to the fixed assets acquired less disposals and the net value of inventory, thus including gross fixed capital formation and changes in inventories.

Gross Fixed Capital Formation  refers to the value of acquisitions less those disposals of fixed assets during a given period. Fixed assets are the assets produced through production activities with unit value above a specified amount and which could be used for over one year. Natural assets, consumer durables, small  instruments are not included. Gross Fixed Capital Formation includes the value of housing, other buildings and structure, equipment and machinery, breeding biological resources, intellectual property right product (expenditure for R&D, the prospecting of minerals and the acquisition of computer software) minus the disposal of them.

Changes in Inventories  refers to the market value of the change in the physical volume of inventory of resident units during a given period, i.e. the difference between the values at the beginning and at the end of the period minus the gains due to the change in prices. The changes in inventories can have a positive or a negative value. A positive value indicates an increase in inventory while a negative value indicates a decrease in inventory. The inventory includes raw materials, fuels and reserve materials purchased by the production units as well as the inventory of finished products, semi-finished products and work-in-progress.

Net Export of Goods and Services  refers to the exports of goods and services subtracting the imports of goods and services.  Exports include the value of various goods and services sold or gratuitously transferred by resident units to non-resident units. Imports include the value of various goods and services purchased or gratuitously acquired resident units from non-resident units. Because the provision of services and the use of them happen simultaneously, the acquisition of services by 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 exports and imports of goods are calculated at FOB.

Institutional Units  refer to economic subjects that can be in a position to own assets and incur liabilities in one's own name; to engage independently in economic activities; and to conduct transactions with other subjects.

Institutional Sectors  refer to groups of institutional units that are homogenous in nature and have been grouped together. The following 4 institutional sectors are identified in the flow of funds accounts: non-financial corporations, financial institutions, government and households. Also treated as an institutional sector is the rest of the world, which is composed of non-resident units that transact with 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 intermediary services or auxiliary financial activities that are closely related with financial intermediary services, mainly covering legal entities engaged in activities of monetary services, capital market services, insurance services, and other financial services. All financial institutions together make up the sector of financial institutions.

Government and the Sector of Governments  Government refer to legal entities and their auxiliary units that are established through the political process and are empowered with legislative, administrative or judicial rights over other institutional within specific regions. The main function of government is to acquire funds through taxation or other means in order to provide goods and services to society and households; and to conduct redistribution of income and properties of society through transfer payment; and engaged in non-market production. Government cover mainly: Party and government organizations at all levels, mass organizations, institutional units, grass roots self-governing organizations, etc. All governments together 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, jointly use entire or part of their income and properties, and share their housing, food and other consumer goods and services. All households together make up the sector of households.

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

Total Income from Primary Distribution  Primary distribution of income refers to the distribution of the value created from production activities among the owners of factors of production and the governments. The final result from production activities is the value-added. Factors of production mainly include labour force, capital, natural resources. Owners of labour force gain remuneration by providing labour. Owners of capitals get income of various forms by providing capital: owners of loan capital receive income from interests. Share holders receive dividends or participation in profit distribution. Owners of natural resources obtains rents for assign the use right of natural resources. Government levies production tax on production activities or factors of production for state administration needs and pay production subsidies for supporting related production activities. Results of primary distribution generate the total income from 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. Owners of land receive rents from leasing of land.

Current Transfers  Transfer refers to the transaction in the form of provision of goods, services or assets by an institutional unit to another institutional unit without receiving any direct corresponding in return from the recipient. Current transfers that don’t involve obtaining or disposing property (except inventory and cash) of one side or both sides. They include regular tax such as income tax and property tax, payment to social securities, social security benefits, social allowances and other current transfers.

Total Disposable Income  Total income from 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 total disposable income subtracting final consumption. Total savings of all sectors make up the total national savings.

Capital Transfer  refers to the transfer that don’t involve obtaining or disposing property (except inventory and cash) of one side or both sides. Capital transfer includes: capital tax, investment subsidy and other capital transfer.

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

Currency  refers to currency that is in circulation in the market, including paper money and coin.

Deposits  refer to credit transactions by which financial institutions accept deposits from clients who could withdraw their deposit at any time or by an agreed time frame. They mainly include demand deposit, time deposit, fiscal deposit, foreign exchange deposit, designated deposit, deposit in trust, customer margin of security company, and other deposits, and flow between financial institutions..

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 an agreed time frame. They mainly include short-term loan and bill finacing, medium- and long-term loan, foreign exchange loan, entrusted loans and other loans.

Bonds  refer to the written debt certificate that to raise funds in the form of notes issued, the commitment to a certain interest rate and a certain period of time to repay. They include government bonds, financial bonds, central bank bonds, and corporation bonds, etc.

Stock  is a certificate that issued by the company in accordance with the provisions of the company law, to raise capital, to justify the shareholder rights and interests and accordingly obtain the dividend and bonus. At present, it only include financing amount of public offering at the stock market that can trade.

Insurance Reserve Funds  consists of net equity of social insurance and commercial insurance, prepayments of insurance premiums, and reserves for outstanding claims, and bond repurchase.

Settlement Fund  refers to fund in float of financial institutions for settlement.

Inter- financial Institutions Accounts  refer to flow of capital between financial institutions, consisting of nostro & vostro accounts, inter-bank lending.

Required and Excessive Reserves  refer to financial institutions’ deposits with the People’s Bank of China.

Central Bank Lending  refer to lending to financial institutions by the People’s Bank of China

International Reserve  refers to the foreign assets that owned by the central bank, and can use control effectively at any time, including monetary gold, SDRs, foreign exchange reserves and reserve position in the International Monetary Fund and other creditor's rights.

Current Account  includes goods, services, primary income, and secondary income.

Primary Income  refers to the returns received by the permanent and nonresident units for the provision of services, financial assets, and leasing of natural resources, including three part: employee compensation, investment income, and other primary income. Employee compensation refers to the labor remuneration in the production process of the employer (belonging to another economy entities) for providing labor input of employees (belonging to an economy entities), including wages and salaries in cash, wages and salaries in goods, social insurance paid by employers. Return on investment refers to the return of the financial assets provided by the resident unit and the nonresident unit, including income from direct investment, return on securities investment and other investment returns.

Secondary Income  refers to the current transfers between resident units and nonresident units, including cash and physical transfers.

Capital Account  reflects the transfer of capital between the resident unit and the nonresident unit, as well as the acquisition and disposal of non productive and non-financial assets occurring between the resident unit and the nonresident unit. Among them, the transfer of assets include non current transfer such as debt relief, investment donations; acquisition and disposal of non productive and non-financial assets include marketing assets and acquisition and disposal of contracts, leases and licensing, etc..

Financial Account  refers to the transaction of financial assets and liabilities between resident units and nonresident units, including financial accounts of non reserve and international reserves.

Direct Investment  refers to the investment made by an investor for the purpose of management of an enterprise in a foreign country, and controlling or influencing in the management.

Security Investment  refers to cross-border transactions of equity securities and debt securities that are not included in direct investment or international reserves.