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 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 includes the primary income created by all resident units and distributed to resident and non-resident units. 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.

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 economic activities are categorized into the following three strata of industry:

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

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 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 wages, bonuses and allowances, which the employees earn in cash or in kind. It also includes the free medical services provided to the employees and the medicine expenses, transport subsidies and social insurance, and housing fund paid by the employers.

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 and labour in the production activities they are engaged in. In contrast to taxes on production, 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 in a given period, drawn in accordance with the stipulated depreciation rate for the purpose of compensating the wear-and-tear loss of the fixed assets or the depreciation of fixed assets imputed 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, currently the conditions in China do not facilitate the revaluation of all the fixed assets. Therefore, only the above-mentioned methods can be adopted at present.

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. It is equivalent to the business profit of the enterprises plus subsidies to 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 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.

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 households by 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 to the owner-occupied housing and services offered by paid family employees; (c) financial intermediate services provided by financial 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 are not included. Gross fixed capital formation can be categorized into total tangible fixed capital formation and total intangible fixed capital formation. Total tangible fixed capital formation includes the value of the construction projects and installation projects completed and the equipment, apparatus and instruments purchased (less those disposed) as well as the value of land improved, the value of draught animals, breeding stock and animals for milk, for wool and for recreational purposes and the newly increased forest with economic value. Total intangible fixed capital formation includes 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.