The Practice and Questions of FOF
(Non-financial) Compilation of NBS
NBS-OECD Workshop on National Accounts
Paris, 9 Dec. – 11 Dec. 2013
XU Yating
Department of National Accounts of NBS
Outline
 Background of FOF compilation of China
 Format of FOF, including financial account and nonfinancial accounts.
 Structure of FOF (non-financial accounts)
 Sectoring in FOF (non-financial accounts)
 Main accounts and transaction items in FOF (non-financial
accounts)
 Comparison with 2008 SNA
 Questions in compilation practices
Background



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1992 – The first Flow of Funds Table ( non-financial
& financial accounts)
2006 – update after the first economic census
2010 – update after the second economic census
2012 – recent update according to 2008 SNA and fresh
fiscal data
2013 – first fill in “non-financial accounts table ( 0800 ) “ in
OECD questionnaire from year of 2000-2011
This presentation will focus on the practices of non-financial
FOF.
Format of FOF (financial)
Sectors
Items
Non-financial
Corporations
Uses
Net Financial Investment
Financial Uses
Financial Sources
Currency
Deposits
Loans
Securities
Investment Funds
Deposits with Margin Securities Trading Account
Insurance Technical Reserves
Inter-financial Institutions Accounts
Required and Excessive Reserves
Cash in Vault
Central Bank Loans
Miscellaneous (net)
Foreign Direct Investment
Changes in Other Foreign Assets and Debts
Changes in Reserve Assets
Errors and Omissions in the Balance of Payments
Financial
General
All Domestic The Rest of the
Households
Institutions Governments
Sectors
World
Sources Uses Sources Uses Sources Uses Sources Uses Sources Uses
Total
Sources Uses Sources
Format of FOF (non-financial)
Sectors
Items
Non-financial
Corporations
Financial
Institutions
General
Governments
Households
All Domestic
Sectors
The Rest of the
World
Total
Uses Sources Uses Sources Uses Sources Uses Sources Uses Sources Uses Sources Uses Sources
Net Exports
Value Added
Compensation of Employees
Taxes on Production, Net
Income from Properties
Interest
Distributed Income of Corporations
Rent on Land Natural Resources,
Others
Total Income from Primary Distribution
Current Transfer
Taxes on Income
Payment to Social Security
Social Security Welfare
Allowances
Others
Total Disposable Income
Final Consumption Expenditure
Household Consumption
Government Consumption
Savings
Capital Transfers
Investment Allowances
Other
Gross Capital Formation
Gross Fixed Capital Formation
Changes in Inventories
Acquisitions Less Disposals of Other Non- financial Assets
Net Financial Investment
Sectoring
 Institutional units are allocated to five institutional sectors:
sectors
contents
Domestic 1.The Non-financial
sectors corporations
2.The Financial
corporations
3.The General
government
central government & local government
social security funds
NPISH
4.The Households
resident households
unincorporated enterprise owned by a household
5.The rest of the world
Accounts & Transaction Items
 FOF (non-financial) including 5 main accounts with 14
transaction items:
 Production account
1. Net export: directly from expenditure-based GDP
2. Value-added: directly from production GDP
 The distribution of income account
3. Compensation of employees: directly from income GDP
4. Production Tax (net): calculated from fiscal income
5. Property income
6. National income
Accounts & Transaction Items(cont)

7.
8.

9.
10.

11.
12.
13.
14.
The redistribution of income account
Current transfer
Disposable income
The use of income account
Final consumption expenditure: directly from expenditurebased GDP
Savings
The capital account
Total capital transfer
Gross capital formation: directly from expenditure-based GDP
Acquisitions less disposals of non-produced non-financial
assets
Net lending/borrowing
Comparison with 2008SNA
Generally in accordance with 2008SNA.
 Still has some differences and shortcomings:
 NPISH is included in General Government instead of
accounted independently or included in household.
 Production account is incomplete.
 Compensation of fixed capital is included in total operating
surplus, didn’t calculate net disposable income and net
savings.
Comparison with 2008SNA (cont)
 Omissions in some non-monetary transactions, such as
compensation in kind and transfers in kind. Didn’t calculate
current transfer in kind, as well as adjusted disposable income
account and actual final consumption.
 Didn’t calculate the adjustment for the change in pension
entitlements.
 Difference between production-based GDP and expenditurebased GDP induces unbalance of capital account, representing
as non-zero net lending/borrowing in total uses.
Questions
 Q1: How to define market production in practice?
 Q2: Which sector should public hospital ( or public university),
who is partly financed ( far less than 50% of its cost) by
government, be incorporated?
 Q3: How to understand the difference in net lending /
borrowing between financial account and capital account, if
the difference is large especially by sectors? Which account
is more reliable?
Questions (cont)
 Q4: Housing provided by government to it’s employees at
very low price, and employees only have limited property
right to the house, for example the house shouldn’t be rented
or sold. How should this kind of welfare be recorded? Is it a
kind of compensation of employees in kind?
 Q5: The definition of “Investment income attributed to
investment fund shareholders”: If the income is from the
price change of the equity, is the income still treated as
investment income? If the investment fund seldom share out
dividents, the investor’s income only represented as price
increase of the fund, how could the investment income be
recorded?
Questions (cont)
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Q6: Residential Land (70 years use right) transaction process:
government purchases land from peasant
real estate development company buy the land from government
household buy land (with housing) from company
recording:
 government acquire land, household disposal land
 Real estate development company acquire land, government disposal land
 Household acquire land, company disposal land
result:
land is still acquired by household.
 If during the process, the land is appreciated, should the appreciation be
recorded, or use the original price that government give to peasant?
 How to estimate the value of land and building when they are sold together,
especially faced with the high price of housing in china?
Questions (cont)
 Q7: How to calculate production tax? Data from fiscal income
and from enterprise survey, which one is more reliable?
 Q8: Retained earnings on foreign direct investment is totally
recorded as property income of foreign investors in income
distribution account and as reinvestment in financial account.
Could this treatment be used in state-owned enterprises?
 Q9: Difficulties in evaluating non-monetary transactions.
Thank you for your attention!