Accounting Method for
China’s Quarterly GDP
by Expenditure Approach
QIU, Qiong
Dept. of National Accounts, NBS
I. Introduction
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1. Starting in 2000
2. Accumulative accounting
3. 3 levels of classification
4. Base year: year 2000, with a base year
change each 5 years
• 5. Data sources: statistical information,
accounting information
I. Introduction
• 6. Accounting process
• 1) Initial accounting: 15 days after each
quarter
• 2) Initial check: 45 days after each quarter
• 3) Final verification: after the final
verification of the annual data by
expenditure
II. Accounting Method for China’s
Quarterly GDP by Expenditure
Approach in Current Prices
• Due to lack of fundamental information,
accounting for China’s quarterly GDP by
expenditure in current prices is mainly
calculated based on the relevant indicators.
1. Household Consumption Expenditures
• 1) Initial accounting: It is calculated from
the total retail sale of consumer goods.
First, we calculate the proportion that the
total retail sale of consumer goods is in the
household consumption expenditures of last
year. Then, we use the proportion to
calculate the quarterly household
consumption expenditures.
1. Household Consumption Expenditures
• 2) Initial check: Using the household survey
materials, we calculate the rural and the
urban data respectively.
• The Rural Household Consumption Expenditures
=cash consumption expenditures of the current quarter
×the annual rural household consumption expenditures of
last year/the annual rural household consumption
expenditures in cash of last year
1. Household Consumption Expenditures
• 2) Initial check
• The Urban Household Consumption Expenditures
=urban household consumption expenditures from the
household survey×the annual urban household
consumption expenditures meeting the requirements of
accounting of last year/the annual urban household
consumption expenditures from the household survey of
last year
2. Government Consumption
Expenditures
• Quarterly government consumption expenditure is
calculated according to the quarterly expenditure
data of financial budget.
1) The day-to-day professional expenditure
=the administrative and the institutional expenditure
concerned of financial budget
- the expenditure transferred
- the irregular expenditure(e.g. capital construction
expenditure, etc. )
2. Government Consumption
Expenditures
• 2) According to the proportion that the day-to-day
professional expenditure of the budget is in the
government consumption expenditures of the
same period of last year, we calculate the quarterly
government consumption expenditures of this year.
• Due to restriction of information available, no
initial check.
3. Gross Fixed Capital Formation
• Gross fixed capital formation
=total investment in fixed assets in the whole country
+investment in fixed assets less than 0.5 million yuan
+increased fixed assets of the trial-produce of new products
+value added in selling the commercial house
+increment of intangible fixed assets
-value for purchasing old buildings and old equipments
-rate for land requisition, land purchasing and
the related migration compensation
4. Increase in Inventory
Quarterly increase in inventory of the initial
accounting and of the initial check
=increase in inventory of industry
+increase in inventory of wholesale and retail trade
=changes of the industrial finished products in stock
+changes of the commodities of wholesale and retail
trade in stock
4. Increase in Inventory
• Increase in inventory of industry
=increase in inventory of industrial enterprises above
designated size /p
p=value added of industrial enterprises above
designated size/gross value added of all industrial
enterprises
4. Increase in Inventory
• Increase in inventory of wholesale and retail trade
=increase in inventory of enterprises above
designated size in wholesale and retail trade/r
r=total value of sales from commodity above the
designated size/gross value of sales from
commodity by all the wholesale and retail trade
5. Net Exports
• For calculating the quarterly net exports of the initial
accounting and of the initial check, we use the statistical
data from the Customs, together with the data concerned
from Balance of Payments of the same quarter of last year.
The step is as follows:
First, according to data of the same period of last year,
we calculate the exchange coefficients between the data of
commodities’ exports and imports from the Customs’
statistics and that of goods’ exports and imports from the
Balance of Payments.
5. Net Exports
• Secondly, using the exchange coefficients from
Step 1, we convert the data of goods’ exports and
goods’ imports from the Customs’ statistics
calculated in RMB into that identical with those
from Balance of Payments, thus we get the gross
exported and the gross imported of goods and the
net exports of goods meeting the requirements of
Balance of Payments.
5. Net Exports
• Thirdly, we determine the proportion of goods exported or
imported in the export of goods and services or in the
import of goods and services during the accounting period.
According to the changing trend of the proportion of goods
exported or imported in the export of goods and services or
in the import of goods and services in each quarter of last
year, and the changing conditions of this proportion of
each quarter in current year, we make adjustments for the
proportion of the same period in last year, and the adjusted
is used as the proportion for the accounting period.
5. Net Exports
• Fourthly, using the proportion of goods exported in the
export of goods and services and that of goods imported in
the import of goods and services, we calculate the export
volume and the import volume of goods and services
respectively, and get the net exports of goods and services.
• For the final verification of quarterly net exports, we
directly adopt the data of imports and exports from
Balance of Payments.
6. The Final Verification
• We do benchmarking adjustments to the annual final
verification data and get the final verification data of
China’s quarterly GDP by expenditure approach.
Taking the year of 2005 as an example, we make
benchmarking adjustments for the quarterly data of
2005 according to composition of the annual GDP by
expenditure approach in 2005, i.e. we distribute annual
data of the final verification to each quarter according
to the proportions the quarterly (accumulated) values of
indicators are in the annual data of 2005 before the final
verification. In mathematical terms, there is:
 I q , 05 

X q , 05 = A05  
  I q , 05 
 q

6. The Final Verification
• Xq,05 refers to the absolute magnitude of the
estimated value in Quarter q in 2005 after the
adjustment.
• Iq,05 refers to the absolute magnitude in Quarter q
in 2005 before the adjustment.
• A05 refers to the absolute magnitude of the annual
data of the final verification in 2005.
• Letter q=quarter 1, quarter 1 to 2, quarter 1to 3.
III. Accounting Method for China’s
Quarterly GDP by Expenditure
Approach in Constant Prices
• For quarterly GDP by expenditure approach
in constant prices, we all adopt the “flopout” method, deflating components of the
quarterly GDP by expenditure approach in
current prices using the corresponding price
indices respectively.
1. Household Consumption
Expenditures in Constant Prices
• Data of the initial accounting and of the initial
check of household consumption expenditures
include those of the rural household consumption
expenditures and those of the urban household
consumption expenditures. We calculate the urban
and the rural household consumption expenditures
in constant prices according to the urban and the
rural household consumption price indices
respectively, using the “flop-out” method.
2.Government Consumption
Expenditures in Constant Prices
• First, using the proportion that the day-to-day professional
expenditures and the CFC is in the annual government
consumption expenditures of last year as the weight, we
conduct weighted average work for the household
consumption price indices and the investment price indices
of the fixed assets, so as to get the government
consumption price index.
• Then, we get the government consumption expenditures in
constant prices from the government consumption
expenditures in current prices divided by the government
consumption price index.
3. Fixed Capital Formation
in Constant Prices
• For the initial accounting of fixed capital
formation in constant prices, we use the
investment price index of fixed assets to deflate
the gross fixed capital formation.
• For the initial check of fixed capital formation in
constant prices, we use different price indices to
deflate the corresponding items respectively. The
concrete situation is as follows:
3. Fixed Capital Formation
in Constant Prices
• For total investment in fixed assets in the whole country,
investment in fixed assets below 0.5 million yuan, fixed
assets increased by the trial manufacture of the new
products and formed by the prospecting of minerals, we
use the price index of investment in fixed assets to deflate
them. For the value added from sales of commercial
houses, we use the sale price index of commercial houses.
For the value of computer software, we deflate it by the
price index of household services. For value of the
purchased old equipment, we use the purchasing price
index of equipment, tools and instruments. For value of
purchasing old buildings, land and the other rates, we use
the price index of the other rates.
4. Increase in Inventory
in Constant Prices
• For increase in industrial inventory, we use
the ex-factory price index of industrial
products to deflate it.
• For increase in inventory of wholesale and
retail trade, we use the retail price index.
5. Net Exports in Constant Prices
• Gross imports and gross exports of goods in constant
prices are calculated by deflating the import price index of
goods and the export price index of goods respectively.
We get the net exports of goods from gross exports of
goods in constant prices minus the gross imports of goods
in constant prices. According to the quarterly price indices
of the imported and the exported commodities compiled by
Customs Bureau, we calculate their simple arithmetic
average number, on which we determine the price indices
of the imported and of the exported goods.
5. Net Exports in Constant Prices
• For the imported and the exported services
in constant prices, since there have not been
the corresponding price indices at present,
we calculate them referring to the import
and the export price indices of goods and
the price indices of the service items.
IV. Major Issues in China’s
Quarterly GDP Accounting by
Expenditure Approach
• 1. The scope of China’s quarterly GDP
accounting by expenditure approach is not
overall due to the insufficiency of basic
information, while the requirements of the
basic information is not identical, thus the
accounting quality is affected.
IV. Major Issues in China’s
Quarterly GDP Accounting by
Expenditure Approach
• 2. Classification of Expenditure Items Is
Too Crude.
• 3. Lack of the Price Indices Supporting
Quarterly GDP Accounting by Expenditure
Approach
IV. Major Issues in China’s
Quarterly GDP Accounting by
Expenditure Approach
• Work to do:
In order to improve China’s quarterly GDP accounting
by expenditure approach, it is necessary for us to
supplement the insufficiencies of the basic information, to
improve the current statistical survey system, to improve
and perfect the statistical means and system, to establish
the fundamental framework of the price index system and
to set up a set of collecting system of statistical
information supporting China’s quarterly GDP accounting
by expenditure approach.