International Cooperation in National Accounts Xu Xianchun Director-General Department of National Accounts National Bureau of Statistics May 10-12, 2004
Contents： Part I：Overview on international cooperation in recent 10 years Part II：Main problems existing in Chinese national accounts Part III：Outlook for further international cooperation
I. Overview on international cooperation in recent 10 years （1）Cooperation with IMF Based on preliminary statistics, 21 person-times (15 persons) from DNA (Dept. of National Accounts) have been involved in the training programs provided by IMF. The topics cover national accounts, financial programming, monetary statistics etc. Of which, 2 persons finished their one-year study in the GRIPS, Japan and obtained their MPP degree under the sponsorship of IMF. Nine persons attended training courses on national accounts held by IMF in US, Singapore and Austria respectively. Nine persons attended the Financial Programming and Policy Courses co-sponsored by the People’s Bank of China and IMF. One person attended the Monetary and Financial Statistics Courses co-sponsored by the People’s Bank of China and IMF.
（2）Cooperation with OECD Cooperation with OECD focuses in two aspects: A. Mathodological research on problematic key issues on national accounts B. Research on cyclical indicators
A. Mathodological research on problematic key issues on national accounts The cooperation in the field of mathodological research on problematic key issues on national accounts is conducted in the form of NBS-OECD workshops held alternatively in Chinese inland cities and in Paris. So far, seven workshops have been held since 1996. Of which, the first（Sept.1996）, the third (Oct.1998), the fifth (Sept.2001), and the seventh (Nov.2003) were held in Beijing, Chengdu and Dalian respectively; the second (Aug.1997), the fourth (Oct.2000), and the sixth (May 2002) were held in Paris. Currently, the preparation for the eighth workshop (Dec.2004) which is going to be held in Paris is in progress.
A. Mathodological research on problematic key issues on national accounts The topics of the workshops cover almost all important issues in national accounts in terms of the complexity or the weak accounting performance, comprising the compilation methods of the annual accounts, housing service statistics, real estate accounting, other services measurement, constant price measures, capital stock estimation, assessment of the quality of GDP, seasonal adjustment in quarterly accounts, benchmarking quarterly accounts to annual accounts, NOE accounting methods etc. Under the sponsorship of OECD, the papers presented are compiled and published by NBS after each workshop in the title of Research of Methodological Issues on National Accounts. So far, the series has been numbered 7.
B. Research on cyclical indicators Cyclical indicator research started in 1998, where the construction of national cyclical indicators is the emphasis for the cooperation of the first phase, and the construction of regional cyclical indicators for the second. Under the technical assistance of OECD expertise, a Chinese-English bilingual book, Business Cycle and Cyclical Indicators in China, was co-published by NBS and OECD in March, 2001. The second phase of cooperation is a further step of the first one, where the possibility of the construction of regional composite leading indicators is explored. The outcome is another Chinese-English bilingual book named Regional Composite Leading Indicators for Shanghai, China was co-printed in Apr. 2002. At present, OECD’s regional cooperation with China in this field has been extended to Shaan Xi Province to help choosing a set of scientific leading indicators.
（3）Cooperation with ADB ADB provides technical assistance to NBS to improve its measurement of service industries, very relevant for a better national accounts, in China. This project was initiated in 2003, which plans to spend three years to help China to achieve a scientific and systematic accounting framework in services accounting based on a fully understanding of current Chinese service statistics practice and on the experiences obtained from the trial estimates for some regional pilot surveys.
（3）Cooperation with ADB • Start-up meeting. A formal start-up meeting was held in Dec. 19, 2003, in which an in-depth discussion was performed and the ideas on the current statistical practice of services, the existing problems, and the improvement proposals were exchanged. • (b) Seminars. The first seminar was held in Beijing on April 20-22, 2004 in accordance with the schedule.
（4）Cooperation with Canada The cooperation between NBS and Statistics Canada are conducted in three fields that are renting measurement for household dwellings, stock value of fixed capital, and quarterly accounts. （a) measurement for household dwellings Drawing experience on the estimation method of Canada on household dwellings and combining the specific situation of China, NBS chose cost method to estimate the rents of household dwellings for a period 1990-2000, which includes the total expenditure during the services comprising the cost of repair and maintenance of dwellings (materials and wages), the administration fees of dwellings charged by housing administration agencies, the imputed depreciation of household dwellings. Based on a great amount of information collected in the process of this project, the share of rents in GDP has increased by 4.5-7.2% via the new method from 1.1-2.2% via the old method. The average increase over the considered period is about 3 percent. The level of rents is increased considerably as well, take 2000 for instance, the rents rises from 194. 46 billion Yuan to 444. 74 billion Yuan. This project was awarded the second-class prize of 2nd NBS Research Outcomes in Feb., 2004.
（4）Cooperation with Canada (b) Measurement of the stock value of fixed capital Under the technical assistance of Statistics Canada, the capital stock measurement project, DNA uses both perpetual inventory method (PIM) and geometric depreciation function method to calculate and re-adjust the net current price value of the stocks of the state-owned fixed capital of China (urban and rural dwellings,machinery and equipments, infrastructure construction, non-dwelling buildings, and livestocks), and the corresponding consumptions of the fixed assets (depreciation). This project was awarded the first-class prize of 2nd NBS Research Outcomes in Feb., 2004.
（4）Cooperation with Canada (c) Quarterly Accounts Two training courses were given alternatively in Beijing and Ottawa, where the participants are from NBS, some regional statistical bureau and some related ministries. The training courses are delivered by experts in the form of presentation and instructor-led lab concerning benchmarking quarterly data and seasonal adjustment, using software developed by Canada. In January 2004, DNA benchmarked the quarterly data over 1992-2001 to annual estimates for the first time based on the project method, and formally published the results.
（5）Cooperation with Statistics Norway • Under the technical assistance of experts from Norway, the Chinese task force for energy accounting in the Project of China-Norway Environmental Statistics and Analysis accomplished all scheduled targets through an effort of 4 years from 1998 to 2001. • Energy accounts compilation • A basic framework and tabulation form were established based on the existing statistics and available data. Energy account of China of 1987, 1995, and 1997 are compiled. • (b) Constructing CGE model of China for comprehensive environmental policy analysis and environmental forecast
II. Main problems in current Chinese national accounts （1）Problems of service-industry measurement （2）Problems of quarterly accounts （3）Problems of constant-price estimation （4）Problems of classification （5）The inconsistency between national accounts and specific statistics in NBS （6）The gap between national data and regional data （7）Problems of environmental accounting （8）The issue of Non-Observed Economy
III. Outlook for further international cooperation DNA expects further technical assistance from the international organizations or related experienced countries in the follow aspects: (1) Improving service-industry measurement of China Desirable technical assistance from international organizations or experienced countries are the techniques on design and implementation of regular sample surveys and data processing for service-industries. In addition, DNA also needs recommendations on how to make best use of the existing departmental records and administration data.
III. Outlook for further international cooperation • （2）Improving quarterly accounts • DNA expects international technical assistance in this field in the following two aspects: • For quarterly GDP accounting by production approach, how to improve service-industry measurement from both methodology and practice perspective;For quarterly GDP accounting by expenditure approach, how to improve the estimates of fixed capital formation, household consumption, change of inventory, and services exports (including regional inflows and outflows of goods and services);How to reduce the differences of estimation between quarterly GDP by production approach and that by expenditure approach. • How to benchmark quarterly GDP more efficiently to annual GDP.
III. Outlook for further international cooperation • (3) Improving constant-price estimation in China • The desired aspects of international cooperation are : • Methodology on compiling produce price indices (PPIs) for service industries. • Methodology on compiling trade price indices (TPIs) for service industries. • How to construct chain price indices for service industries.
III. Outlook for further international cooperation • (4) Improving the quality of regional GDP accounting • The desired aspects of international cooperation are: • Construct a set of scientific and comprehensive indicators for national and regional GDP quality assessment. • Develop techniques on reducing the gap between national GDP estimation and the sum of regional GDP estimation.
III. Outlook for further international cooperation (5) Improving environmental accounting in China Due to the increasing importance and the complexity of environmental accounting, the existing outcomes of research and the experiences of practice should be absorbed before the compilation of the environmental accounts of China can be started. Therefore, DNA expects continuous support from international organizations and related experienced countries in this field.
III. An outlook for further international cooperation (6) Establishing framework of NOE accounting in China In theory, NOE (Non-Observed Economy) is necessary to be included in GDP accounting to ensure a comprehensive, exhaustive, high quality GDP, and to make GDP comparable internationally. Therefore, DNA welcomes technical assistance on establishing Chinese NOE accounting framework in adapting the circumstances that the share of NOE in Chinese GDP has been increasing over time.