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      03. NATIONAL ACCOUNTS
 
Indicator
Explanation
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 (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 mainly distributed to the resident units of that country while a 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. Thus the concept of gross national product is formed, which equals to gross domestic product plus net factor income from abroad. Unlike gross domestic product which is a concept of production, gross national product is a concept of income.
Gross Domestic Product (GDP) refers to the final products of 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. The form of value 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 intimidate input of materials and services of the nature of non-fixed assets or 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 the value of all final goods and services for final use by all resident units plus the value of 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.
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. The above classification is universal although it varies to some extent form country to country. Industry in China comprises:
(1) Primary industry agriculture (including farming, forestry, animal husbandry and fishery).
(2)Secondary industry industry (including mining and quarrying, manufacturing, production and supply of electricity, water and gas) and construction.
(3)Tertiary industry all other industries not included in primary or secondary industry.
Due to the fact that tertiary industry involves in a large variety of industries in China, it is divided into two sectors: circulation sector and service sector and further into four levels:
a.The first level: circulation sector, including transportation, storage, postal and telecommunications, wholesale and retail trade, and catering trade.
b.The second level: service sector providing services for production and consumption, including banking, insurance, geological survey, water conservancy management, real estates, service for residents, service for agriculture, forestry, animal husbandry, fishery, subsidiary services for transportation and communications, comprehensive technical services, etc.
c.The third level: service sector for upgrading scientific, educational and cultural level of the people, including education, culture and arts, broadcasting, movies, television, public health, sports, social welfare and scientific research, etc.
d.The fourth level: sector providing services for public needs, including government agencies, political parties, social organizations, military and police service.
GDP Calculated with Expenditure Approach refers to total expenditure on final consumption, total capital formation and net export of goods and services by resident units of a country 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 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 is classified into household consumption and government consumption.
Households Consumption refers to the total expenditure of resident households on the final consumption of goods and services. The households consumption is calculated at market prices, namely the purchaser's prices which the households pay; the purchasers prices of goods are the prices the households pay when they obtain the goods, including the transport and commercial expenses paid by the households. In addition to the consumption of goods and services bought by the households directly with money, the expenditure on goods and services obtained by the households in other ways, i.e. the so-called imputed expenditure on consumption, is also included in the households consumption. The imputation expenditure of the households on consumption includes the following types: (a) the goods and services provided to the households by the units in the form of payment in kind and transfer in kind; (b) the goods and services produced and consumed by the households themselves, in which the services refer only to the services provided by the residential buildings owned by the households; (c) the services of financial intermediary provided by the financial institutions; (d) the insurance services provided by the insurance companies.
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. (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 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 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 assets formation. The total tangible assets 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, milk, wool and recreational animals and the newly increased economic forest in a certain period. The total intangible assets formation includes the prospecting of minerals, the acquisition of computer software, the originals of recreational works and works of literature and arts minus the disposal of them.
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, 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 import and export of services do not appear to have the phenomena of crossing the border of the country. 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.
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 fee paid by the labourers' working units for them. 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 residual 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 some factors of production, such as fixed assets, land and labour force, used in the production activities they are engaged in. 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 is 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 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 and calculated as part of the cost. 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.
Direct Input Coefficient refers to the volume of products and services of all sectors consumed directly by a certain sectors productive units, which are needed for their total output. It is also named as technical coefficient. It represents the direct technical economical ties and direct interdependence between the sector and other sectors.
Total Input Coefficient refers to the volume of products and services of all sectors needed for a certain sectors productive units to increase their total output. Total input coefficient is equal to the sum of direct input coefficient and total indirect input coefficient. It is a major indicator to disclose the technical economical ties and interdependence between sectors of the national economy.
Institutional Units refer to economic entities that are in a position to own assets and incur liabilities in their own name, and to engage in economic activities and conduct transactions with other entities. Depending on their different role in production, consumption and financing, 4 groups of resident institutional units are identified in the flow of fund tables, namely, non-financial corporations, financial institutions, governments, households and the rest of the world.
Institutional Sectors refer groups of institutional units that are classified by their nature. Following groups (or institutional sectors) are identified in the flow of fund accounts: the sector of non-financial corporations, the sector of financial institutions, the sector of governments and the sector of households.
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. 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 services or auxiliary financial activities, 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 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 Sector of 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 value-added in the form of compensation for labours, depreciation of fixed assets, production taxes and property income. The sum of income obtained through primary distribution is called the total income of primary distribution.
Current Transfers include 4 parts: income tax, payment to social securities, social allowances and other current transfers.
Total Disposable Income refers to income received by institutional sectors on the basis of total income of primary distribution and through current transfers. This is the income that is used for final consumption and savings.
Total Savings is the difference between total disposable income and the final consumption.
Capital Transfer refers to the free payment from one sector to another sector for capital formation, and is a transaction that seeks no return from the recipient. The capital transfer differs from the current transfer in 2 aspects. Firstly, the objective of the transfer is investment rather than consumption. Secondly, capital transfer features the transfer of the ownership of the capital rather than the utilization right of the capital. Capital transfer includes investment subsidies and other capital transfers. Under the current situation in China, investment subsidies refer to investment allocations from government finance, i.e. the financial allocations that are used for capital construction, updating and transformation projects and other investment in fixed assets.
Net Financial Investment refers to total savings plus the net income from capital transfer minus the gross capital formation from the point of view of physical transaction. In terms of monetary transaction, it is the increased value of financial assets minus the increase of the financial liabilities.
Currency in Circulation refers to currency that is in circulation in the market, including notes and fractional currency.
Savings Deposit refers to deposits of all types, including current deposit, fixed deposit, household savings deposit, government deposit, foreign exchange deposit and other deposits.
Loans refer to loans of all forms provided by financial institutions to non-financial sectors, including short-term loans, medium and long-term loans, government loans, foreign exchange loans and other loans.
Securities include bonds and stocks.

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 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.
Goods refer to imported or exported goods through Chinese customs. Figures in the Yearbook are based on customs statistics, adjusted in line with the concepts and definitions of the balance of payment statistics and with the change in the ownership of commodities. Statistics on both exports and imports are valued at f.o.b. prices.
Services include transportation, tourism, communications, construction, insurance, international financial services, computer and information service, royalty for patent, trademarks and other special rights, commercial services, personal cultural and recreational services and government services.
Earnings include compensation of employees and earnings from investment (including 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, made in forms of exclusive investment, joint investment, contracted operation and cooperative development, 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.
Security Investment refers to the purchase of stocks and securities issued by central and local governments and enterprises in China by institutions or individuals of foreign countries or from Hong Kong, Macao and Taiwan ( and the re-purchase by Chinese institutions), and the purchase and selling of stocks and securities issued in foreign countries and in Hong Kong, Macao and Taiwan by Chinese governments, enterprises and individuals.
Other Investment includes 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 Fund's credits. The increase in the reserve assets is expressed as a negative figure.
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