Coverage of OECD NA Questionnaire by Chinese Data

1. Coverage of OECD NA Questionnaire by Chinese Data ZHAO Hong Department of National Accounts, NBS 6-10 November, 2006，Paris

2. Contents Annual Data • 0101A—Gross value added at basic prices and gross domestic product at market prices • 0102A—GDP identity from the expenditure side • 0103A—GDP identity from the income side • 0107A—Disposable income, saving, net lending/borrowing • 0109A—Real disposable income • 0110A—Population and employment • 0111A—Employment by industry • 0117A—Final consumption expenditure of households by durability • 0200A—Main aggregates of general government Quarterly Data

3. General Description Main difficulties in joining the OECD data dissemination program • Classification—industrial, sectors； • Transaction items— COFOG, COICOPE, products, detailed breakdowns； • Valuation—basic price, replacement price, holding gains； • Consolidated information—financial assets； • Volume measures—accounting methods, no-publication； • Balance sheet—not regular, no-publication.

4. 0101A—Gross value added at basic prices and gross domestic product at market prices Current data are available, but need some adjustment in two aspects: A. Valuation 1. Producer’s price and basic price （1）Relationship between value-added at basic price and GDP at market price in the SNA: value-added at basic price + taxes on products = GDP at market price （2） Relationship between producer’s price and basic price in the SNA: producer’s price = basic price + other taxes on products other than VAT 2. Taxes in China—7 types，29 groups (Appendix 2) taxes on production = taxes revenue – income type taxes – taxes on properties (current and capital) Of which, taxes on products = turnover type taxes（value added type taxes, general sales taxes, import duties, excise duties and consumption taxes） + Car registration taxes + fuel consumption taxes + behavior taxes ( taxes on car using, business and professional licences etc.) taxes on other production = taxes on production – taxes on products 3. Chinese type producer’s price：including non-deductible VAT, inconsistent with producer’s price in SNA 4. Relationship between value-added at Chinese type producer’s price and GDP at market price: ∑ value-added at Chinese type producer’s price= GDP at market price

5. Value-added adjustment from Chinese producer‘s price to OECD basic price： • Direct method: First, deriving taxes on products by industry by aggregating corresponding taxes revenues from the taxes authorities. Second, deduct taxes on products from taxes on production to achieve value-added at basic prices. • Ratio adjustment method: Multiply 75% to taxes on production to derive taxes on products, then deduct it from taxes on production to achieve value-added at basic prices. 3. No separate data on taxes on production, and subsidies on production, therefore no separate data on taxes on products, and subsidies on products

6. B. Industrial classification Value-added data are available according to the new Chinese Standard Industrial Classification（GB/T 4754-2002）。However, in terms of time series, data for some industries need to be adjusted. For instance, wholesale, retail and restaurants are put in one industry, which need to be separated and put the restaurants into other service activities in questionnaire 0101A.

7. Volume measures are not available • Up to the present, NBS has never published any level data of GDP at constant prices by production approach. By the end of 2006, some of the constant data might be released when the 2004 Economic Census data and the revised time series are published. But no specific information on what and how. • Users who would like to try to derive constant GDP aggregates by themselves should be careful not to develop data series based on growth rate earlier than 1990. Before 1990, the constant GDP estimation method in China is unique, where even in base year, the constant data is not set to equal the current data. In 1990, the practice of constant GDP estimation started follow the international conventions.

8. 0102A—GDP identity from the expenditure side Current price data Part of the current price data are available, but some concepts bears differences Households final consumption expenditure NPISH—classification Coverage—reimbursement of health expenditure Actual individual consumption—lack of COFOG information Government final consumption expenditure Government final consumption expenditure = Final consumption expenditure – households final consumption expenditure

9. Households final consumption expenditure Households final consumption expenditure—differences in two aspects: 1. Classification： NPISHs treatment No adjustment: controlled and mainly financed by general government 2. Coverage： reimbursement of health expenditure No adjustment: Chinese coverage wider that in OECD countries.

10. Actual individual consumption Actual individual consumption Actual individual consumption = households final consumption expenditure (including NPISH) + government expenditure on individual consumption Government expenditure on individual consumptionincluding（COFOG） : • 04 Education • 05 Health • 06 social Security and Welfare • 08.01 Sport and recreation • 08.02 Culture • Part of other expenditures including provision of housing, collection of household refuse, the operation of transport system etc.

11. Gross fixed capital formation The following information are not available related to gross fixed capital formation： 1. Gross fixed capital formation by asset The existing investment statistics can not provide information on investment by asset, therefore, gross fixed capital formation by assets in national accounts is not available. • Acquisition less disposal of valuables No estimation on acquisition less disposal of valuables has been conducted up to the present in the NBS, therefore it would be treated as zero in the OECD questionnaire. The availability of the above two types of information depends heavily on the improvement of the basic statistics of China, therefore, no data will be available in short-term.

12. Volume Measures Up to the present, NBS has never published any level data of GDP at constant prices by expenditure approach. By the end of 2006, some of the constant data might be released when the 2004 Economic Census data and the revised time series are published. But no specific information on what and how.

13. 0103A—GDP identity from the income side Only required for current price data，generally can be satisfied except: • No separate data on taxes on production and imports, and subsidies on production and imports • Industrial classification problems similar to that in 0101A Up to the present, no data on national GDP components by income approach have been published. NBS intends to publish national GDP components by income approach by the end of 2006 when published the 2004 Census Data and the revised time series. Statistical discrepancy in Table 0103A is zero.

14. Summary Positive feedback from NBS—very interested in participating in the OECD data dissemination program Considerable changes faced by NBS: • Establish investment statistics by assets and by industry； • Estimate households final consumption expenditure according to COICOP； • Estimate general government final consumption expenditure according to COFOG； • Improve labour statistics, distinguish self-employed persons from employees by industries, provide working-hours by industry, complete the coverage of unemployment statistics etc. ；

15. Separately reflect taxes on products/production, and subsidies on products/production; and with better detailed information ; • Collect consolidated and non-consolidated data financial transactions (in collaboration with People’s Bank of China); • Improve the estimation and dissemination of volume measures； • Additional estimation on the unavailable parts of national accounts, including NPISHs, acquisition and disposal of valuables, other changes in volume account (consolidated/non-consolidated), revaluation accounts (consolidated/non-consolidated), balance sheet for financial assets and liabilities (consolidated/non-consolidated) etc.

16. Thank you for your attention!