Explanatory Notes to Major Statistical Indicator
Gross National Income (GNI) is calculated at market prices. It 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 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 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 remuneration for the labourers and property income. Thus the
concept of gross national product is formed, which equals to gross domestic
product plus labourers remuneration and property income from abroad, minus
labourers remuneration and property income to abroad. Unlike gross domestic
product which is a concept of production, gross national product is a concept
of income.
Gross Domestic Product (GDP) is calculated at market
prices, it refers to the final result of all resident units in a country 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 inputs of
non-fixed assets and services or the summation of the value-added of all
resident units; the form of income includes all the income produced 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 minus imports of goods and services.
In the practice of national
accounting, gross domestic product is calculated by three approaches, i.e.
production approach, income approach, and expenditure approach, respectively,
to reflect gross domestic product and its composition from different aspects.
Calculated with production
approach, it equals to the total value-added of all sectors. Calculated with
income approach, it equals to the summation of depreciation of fixed assets,
remuneration for the labourers, net taxes on production and operating surplus.
Calculated with expenditure approach, it equals to the summation of total
consumption, total investment and net exports.
The
concept of resident units is very important to the definition of gross domestic
product and specifying different business scope. Resident unit refers to the
economic unit which has economic benefits center in a country’s economic
territory. A country’s economic territory is composed of the geographic
territory controlled or possessed by the government of the country. An economic
unit with economic benefit center in the country refers to the economic unit
which holds certain activities places (houses, workshops or other buildings
etc.) inside a country’s economic territory and is engaged in economic
activities with a certain scale for more than a certain period of time (usually
one year). Gross domestic product reflects the final result of all resident
units’ production activities. The final result here has double meanings. From
the aspect of usage value, it includes all the goods and services for current
consumption, investment and net exports, but excludes the goods and services
for production process. From the aspect of value, production process is also
the value transfer process, where the value of product expended during the
production (intermediate product) is transferred to new products, and thus
gross output value should minus all the transferred value of intermediate input
to avoid repeated count of product value.
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
Primary industry: agriculture (including farming,
forestry, animal husbandry and fishery).
Secondary industry: industry (including mining and
quarrying, manufacturing, production and supply of electricity, water and gas)
and construction.
Tertiary industry: all other industries not included in primary or secondary industry.
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.
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.
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 governments 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 in 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
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.