Explanatory Notes on Main Statistical Indicators

Gross Domestic Product (GDP)　refers to the final products of all resident units in a region during a certain period of time. Gross domestic product is expressed in three different forms, i.e. value added, income, and products respectively. The form of value added refers to the total value of all products and services produced by all resident units during a certain period of time minus total value of input of materials and services of the nature of non-fixed assets of the summation of the value added of all resident units; the form of income includes all the income created by all resident units and distributed primarily to all resident and non-resident units; the form of products refers to all final goods and services minus imports of goods and services. In the practice of national accounting, gross domestic product is calculated with three approaches, i.e. product approach, income approach, and expenditure approach respectively to reflect gross domestic product and its composition from different aspects.

Net Value of Domestic Product　is the abbreviation for net value of domestic product calculated in market prices. It equals to gross domestic product minus the depreciation of fixed assets of total resident units.

Gross National Product　is the abbreviation for net value of domestic national product calculated by market prices. It is the final income that after first distribution of all resident units in a country (or region) in a certain period of time. The added value created during productive activities in resident units in a country is mainly distributed to the resident units in this country, while a part of it to non-resident units in form of taxes on production and import (deducted subsidies for production and importation), laborers’ remuneration and income from property, then come out the concept of gross domestic product. It equals to gross domestic product adds income of net elements from foreign countries. GDP is a concept of production, while GNP is a concept of income.

Net Value of Gross National Product　is the abbreviation for net value of national product calculated in market prices. It equals to gross national product minus the depreciation of fixed assets of total resident units.

Three Industries　Industry structure has been classified according to the historical sequence of development. Primary industry refers to extraction of natural resources; secondary industry involves processing of primary products; and tertiary industry provides services of various kinds for production and consumption. Industry in China comprises:

Primary industry: agriculture (including farming, forestry, animal husbandry and fishery).

Secondary industry: industry (including mining and quarrying, manufacturing, and electricity, gas and water production and supply).

Tertiary industry: all other industries not included in primary or secondary industry. Since tertiary industry includes various trades and is with extensive coverage, it is divided into 2 parts according to our country’s actual situation: circulation department and service department.

Value Added　refers to the newly increased value and the transfer value of fixed assets created by all resident units in a country (or a region) during a certain period of time. It can be calculated by production approach and income approach. In terms of product approach, it is the total output minus intimidates input. In terms of income approach, it is the summation of laborers’ remuneration, net taxes on production, depreciation of fixes assets and operating surplus.

Laborers’ Remuneration　refers to the whole payment of various forms earned by the laborers from the productive activities they are engaged in. It includes wages, bonuses and allowance the laborers earned in monetary form and in kind. It also includes the free medical services provided to the laborers and the medicine expenses, traffic subsidies and social insurance free paid by the laborers’working units for them. Social insurance free paid by the laborers’ working units refers to the social insurance directly paid by units to government institutions in charge of social insurance, or premiums paid by units for retired employees, death, invalidity and medical treatment of workers and staff in this unit. As the individual economy is concerned, since the laborers’ remuneration is not easily distinguished from the operating profit, both are treated as laborers remuneration.

Net Taxes on Production　refers to the residual of the taxes on production minus the subsidies on production. The taxes on production refer to the various taxes, extra charges and fees levied on the production units on their production, sail and business activities as well as on some factors of production, such as fixed assets land and labor force, used in the production activities they are engaged in. Concretely, they include taxes on sales, additional tax, value added tax, various taxes from expense for administration, way maintenance fee, waste discharging fee and electricity and water bills should be paid, and specific income from monopoly tobacco and liquor turned in government. In contrast to the taxes on production, the subsidies on production refer to the unilateral transfer of part of the government’s revenue 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 to the grain institutions, foreign trade corporations’receipts from drawback, etc.

Depreciation of Fixes Assets　refers to the depreciation of fixed assets of a given period, drawn in accordance with the stipulated depreciation rate for 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.

Operating Surplus　refers to the balance of the value added created by the resident units deducting the laborers’ 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 Calculated by Expenditure Approach　refers to total expenditure on final consumption, total capital formation and net export of goods and services by resident units of a region in a certain period of time. It reflects the composition of GDP by its use.

Final Consumption　refers to the total expenditure of resident units on final consumption of goods and services in a certain period, namely the expenditure of the resident units for purchase the 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 is classified into household consumption and government consumption.

Household Consumption　refers to the total expenditure of resident households on the final consumption of goods and services in a certain period. The expenditure of resident households on the final consumption of goods is recorded when the proprietary rights of goods changed, and the expenditure of resident households on the final consumption of services is recorded when the services are providing. The households’consumption is calculated at market prices, namely the purchaser’s prices that the households pay; the purchaser’s prices of goods are the prices the households pay when they obtain the goods including the transport and commercial expenses paid by the households.

Government Consumption　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 at free charge or lower prices. The former equals to the output value of the government services minus the value of operating income obtained by the government departments, and the output value of the government services equals to its current operating expenditure plus depreciation of fixed assets. The latter equals to the market value of 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 and the change in inventory including the total fixed assets formation and the increase in inventory.

Total Fixed Capital Formation　refers to the value of fixed assets purchased, transferred in by the resident units and those produced and used by themselves deducting the value of fixed assets sold and transferred out. It can be classified into total tangible assets formation and total intangible formation.

Increase in Inventory　refers to the market value of the change in inventory, i.e. the difference of value between the beginning and the end of the period. 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, products work-in-progress and semi finished products ect.

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 included the value of various goods and services purchased or gratuitously acquired by the resident units from the non-resident units.

Income of Net Elements from Foreign Countries (Regions)　refers to the balance, which taxes on production and import (deducted subsidies for production and importation), laborers’ remuneration and income from property from foreign countries (regions) minus the ones paid to foreign countries (regions). GDP adds income of net elements from foreign countries (regions) equals GNP.