Preliminary Accounting Results of GDP for the Second Quarter and First Half of 2024

Based on relevant basic data and accounting methods for gross domestic product (GDP), the results of the preliminary accounting of China's GDP in the second quarter and the first half of 2024 are as follows:

Preliminary Accounting Results of GDP for the Second Quarter and First Half of 2024

Y/Y Growth Rate on GDP

Q/Q Growth Rate on GDP

Refer to NBS database (http://data.stats.gov.cn) for more accounting results.

Annex:

Notes on the Quarterly GDP Accounting in China

1. Overview of quarterly GDP accounting

1.1 Basic concept

GDP is the final result of the productive activity of all resident units in a country over a certain period. GDP is the core indicator of national economic accounting and an important indicator of the economic situation and level of development of a country.

There are three methods of GDP accounting, namely, the production-based method, the income-based method, and the expenditure-based method. The three methods reflect the results of productive activities of the national economy from different perspectives. The production-based method is a method of obtaining value added by removing the value of intermediate goods and services that are inputs to the production process from the value of goods and services created in the production process. The formula for calculating the value added of the production-based method in each sector of the national economy is as follows: value-added = total output - intermediate inputs. The value added of the production-based method in each sector of the national economy is summed up to obtain the gross domestic product (GDP) of the production-based method. The income-based method accounts for the results of production activities from the perspective of the income generated by the production process. According to this method of calculation, value added consists of four components: compensation of workers, net taxes on production, depreciation of fixed assets, and business surplus. The formula is value added = compensation of workers + net taxes on production + depreciation of fixed assets + business surplus. The sum of the value added of each sector of the national economy under the income-based method is equal to the GDP of the income-based method. The expenditure-based method is a method of calculating GDP from the perspective of the end use of the results of productive activities. The end use consists of final consumption expenditure, gross capital formation, and net exports of goods and services.

The quarterly GDP released by the National Bureau of Statistics of China (NBS) is the result of accounting by the production-based method.

1.2 Scope of accounting

1.2.1 Scope of production

The scope of production for GDP accounting includes the following four components: first, the production of goods or services that producers supply or intend to supply to other units; second, the subsistence production of all goods used by producers for their final consumption or for fixed capital formation; third, the subsistence production of knowledge-carrying goods carried out by producers for their final consumption or for fixed capital formation, excluding similar activities carried out by the household sector; and fourth, the subsistence production of housing services provided by owner-occupied dwellings, and of household and personal services provided by paid domestic service workers. The scope of production does not include unpaid household and personal services, natural activities not controlled by certain units (e.g., wild, uncultivated forests, natural growth of wild fruits or berries, natural growth of fish populations in the high seas), etc.

1.2.2 Subjective scope of production activities

The scope of subjects of GDP production activities includes all resident units with centers of economic interest within the territory of the Chinese economy. The quarterly GDP data in this report are national data accounted for by the NBS of China, and do not include GDP data for Hong Kong, Macao Special Administrative Region, and Taiwan Province of China.

1.3 Accounting units

GDP accounting is mainly based on legal entities as the accounting unit. In accounting, legal entities are classified into different sectors based on the main activities they are engaged in, and the value added of each sector is calculated separately, which is then summarized to obtain GDP.

1.4 Accounting frequency

The accounting frequency is quarterly. China used cumulative accounting to account for quarterly GDP from the first quarter of 1992 through the second quarter of 2015, i.e., GDP data were calculated for the first quarter, the first-second quarter, the first-third quarter, and the first-fourth quarter of each year, respectively, and the preliminary accounting of GDP for the first-fourth quarter was the preliminary accounting of annual GDP. From the third quarter of 2015, the quarterly accounting method was used, that is, the GDP data of the first quarter, the second quarter, the third quarter, and the fourth quarter of each year were calculated respectively, and the accumulated data was obtained by adding the data of the current quarter.

Since the first quarter of 2011, the NBS has officially released the month-on-month growth rate of GDP in each quarter.

1.5 Legal basis and regulations

GDP accounting strictly complies with the provisions of the Statistics Law of the People’s Republic of China. Currently, the GDP of China is measured according to the requirements of the Chinese System of National Accounts (2016), which adopts the basic accounting principles, contents, and methods of the United Nations System of National Accounts (2008).

1.6 Confidentiality

According to the provisions of Article 9, Chapter I, of the Statistics Law of the People’s Republic of China, statistical organizations and statisticians shall maintain the confidentiality of State secrets, commercial secrets, and personal information that they learn about in the course of their statistical work.

National accountants shall maintain strict confidentiality of unpublished specialized statistical data and administrative record data used in conducting GDP accounting, as well as strict confidentiality of current GDP data until the GDP accounting data are released.

1.7 User requirements

Domestic users of quarterly GDP data are mainly government departments, research organizations, universities and colleges, industry associations, the media, and the general public. In addition, the NBS of China regularly provides the quarterly GDP data of China to international organizations such as the United Nations, the International Monetary Fund, the Organization for Economic Cooperation and Development, and the Asian Development Bank.

2. Quarterly GDP accounting methods

2.1 Classification system

In quarterly GDP accounting, industry division is based on the Chinese standard Industrial Classification for National Economic Activities and Industry Classification Standard, and two classifications are used.

The first classification is the industrial classification for national economic activities, using the National Industrial Classification of All Economic Activities (GB/T4754-2017)issued by the Standardization Administration of China in 2017. Two levels of classification are used for practical accounting purposes.

The first level of classification is based on the categories in the industrial classification for national economic activities and is divided into 11 industries, including agriculture, forestry, animal husbandry and fishery, industry, construction, wholesale and retail trades, transport, storage and post, hotels and catering services, financial intermediation, real estate, information transmission, software and information technology services, leasing and business services, and other industries. The industry consists of three sectors: mining, manufacturing, and production and supply of electricity, heat power, gas and water. Other industries include seven categories of sectors, including scientific research and technical services, water conservancy, environment and public facilities management, residential services, repair, and other services, education, health and social service, culture, sports and entertainment, public administration, social security, and social organizations.

The second level of classification builds on the first level of classification by refining some of the categories of the industrial classification for national economic activities into broad industry categories.

The second classification is the three-industry classification, which is based on the 2018 revision of the NBS of China of the Regulations on the Division of the Three Industries, and is divided into the primary, secondary, and tertiary industries. The primary industry refers to agriculture, forestry, animal husbandry, and fishery (excluding agriculture, forestry, animal husbandry and fishery specialties and auxiliary activities); the secondary industry refers to mining (excluding mining specialties and auxiliary activities), manufacturing (excluding fabricated metal products, machinery and equipment repair), production and supply of electricity, heat power, gas and water, and construction; the tertiary industry, i.e., the service industry, refers to industries other than the primary and secondary industries ( excluding international organizations).

2.2 Source of data

In the quarterly GDP accounting, all applicable economic statistics survey data available at the time of the accounting are used in the GDP accounting. The source of data consists of two main parts:

First, national statistical survey information refers to a variety of statistical information obtained from statistical surveys conducted by the national statistical system, such as statistical surveys on agriculture, forestry, animal husbandry and fisheries, industry, construction, wholesale and retail trades, hotels and catering services, real estate, and services by enterprises above the designated size, as well as population and labor and wage statistics, price statistics, and so on.

Second, the administrative record and information of the administrative management departments mainly include relevant data from the Ministry of Finance of the People’s Republic of China, the People’s Bank of China, the State Taxation Administration of China, China Securities Regulatory Commission, and other administrative management departments, such as local and foreign currency credit income and expenditure of financial institutions of the People’s Bank of China, and tax information of the State Taxation Administration of China in different industries.

2.3 Accounting methods

2.3.1 Accounting method of value-added at current prices

Depending on the source of data, quarterly value-added at current prices is accounted for using the value-added rate method, extrapolation of relevant value-volume indexes, and extrapolation of current prices through constant prices.

2.3.1.1 Speed extrapolation of relevant value-volume indexes

The method of speed extrapolation of relevant value-volume indexes is to use the speed of growth of current prices of relevant value-volume indexes to extrapolate the speed of growth of value-added at current prices, and then multiply the current price value-added of the same period of the previous year by the extrapolated speed of growth of value-added at current prices to arrive at the value-added at current prices of the current period, which is calculated as follows:

Value-added at current prices = Value-added at current prices of the same period of the previous year × (1 + Speed of growth of value-added at current prices)

Among them, the speed of growth of value-added at current prices is determined according to the speed of growth of current prices of relevant value-volume indexes and the quantitative relationship between the speed of growth of value-added at current prices in previous years and the speed of growth of current prices of relevant value indicators.

2.3.1.2 Extrapolation of current prices through constant prices

First, the value-added at constant prices in the current period is obtained by the method of extrapolation of volume indexes, and then the value-added at current prices is calculated according to the relevant price index. The calculation formula is:

Value-added at current prices = Value-added at constant prices × Price index

2.3.2 Accounting method of value-added at constant prices

The value-added at constant prices is to convert the value-added calculated at the current price into the value calculated at a fixed period (base period), to eliminate the influence of price change factors and make the values in different periods comparable. The value-added at constant prices is calculated by the fixed base period method. At present, the base period is changed every five years, and the base period of value-added at constant prices from 2021 to 2025 is 2020.

Quarterly value-added at constant prices accounting is mainly based on the price index reduction method and extrapolation of volume indexes.

2.3.2.1 Price index reduction method

The relevant price index is used to directly reduce the value-added at current prices and calculate the value-added at constant prices. The calculation formula is:

Value-added at constant prices of a certain sector = Value-added at current prices of the sector ÷ Price index

2.3.2.2 Extrapolation of volume indexes

The speed of growth of value-added at constant prices is extrapolated by using the speed of growth of relevant volume indexes, and then the value-added at constant prices of the current period is calculated by using the value-added at constant prices of the same period in the previous year and the extrapolated speed of growth of value-added at constant prices. The calculation formula is:

Value-added at constant prices of a certain sector = Value-added at constant prices of the same period in the previous year of the sector × (1 + Speed of growth of value-added at constant prices of the sector)

Among them, the speed of growth of value-added at constant prices is determined according to the speed of relevant volume indexes in the current period and the quantitative relationship between the speed of growth of value-added at constant prices in previous years and the speed of growth of relevant volume indexes.

2.4 Seasonal adjustment

The month-on-month growth rate of GDP is the result of comparing quarterly value-added to the value-added data in the previous quarter. In the calculation, the effect of seasonal factors on the time series has to be removed, and the time series is seasonally adjusted using the National Bureau of Statistics of China version of the Seasonal Adjustment Software (NBS-SA). NBS-SA is developed based on the seasonal adjustment software that is currently more commonly used internationally, taking into account China-specific seasonal factors. The software adds a new module to deal with China-specific seasonal factors, and effectively eliminates the factors, including the factors of flexible holidays such as Chinese New Year, Dragon Boat Festival, and Mid-Autumn Festival, the factors of the shift in the number of working days per week from the original 6-day system to the 5-day system, and the factors of the change in holidays and changes brought about by the leave in lieu, and so on.

3. Revision of quarterly GDP data

3.1 Necessity of revision

Preliminary quarterly GDP accounts are highly time-sensitive and are generally released about 15 days after the end of the quarter. At this point, not all of the basic data needed for GDP accounting is available, so the preliminary quarterly GDP accounts are derived using specialized statistical progress information and extrapolation of relevant indicators. Subsequently, as the available basic information continues to increase and improve, GDP data will be revised using more complete basic information, such as annual reports of specialized statistics, industry financial information, and fiscal accounts, so that they can more accurately reflect the actual situation of economic development.

3.2 Revision procedures

According to the latest reform of GDP accounting and data release system of NBS of China, quarterly GDP accounting in China is divided into two steps: preliminary accounting and final verification. Usually, after the annual GDP is finally verified, the quarterly data should be revised, which is called routine revision. After the national economic census is carried out, new basic data that have a great influence on GDP data are found, or the annual GDP historical data are revised after the calculation method and classification standard have changed, the quarterly GDP historical data should be revised accordingly, which is called comprehensive revision.

3.3 Revision methods

3.3.1 Revision of data for the current measured quarter

At present, the method of revising quarterly GDP data in China is the proportional connection method, that is, the method of adjusting quarterly data by using the difference between the annual benchmark value and the summary of the four quarters in the year. The basic practice of the proportional connection method is: firstly, the value-added at current prices and constant prices of various industries in the national economy are connected respectively, and GDP and the value-added of the three industries are the sum of the value-added of the industries after connection. The connection method between constant price GDP and the value-added at constant prices of three industries is the same as that of the current price.

3.3.2 Revision of month-on-month data

Because the object of seasonal adjustment is time series data, when any quarterly data in time series changes, it will affect the result of seasonal adjustment. Adding the data of the latest quarter to the time series will also make the month-on-month data of the previous quarter change more or less, which is the result of the automatic correction of the model. According to the principle of seasonal adjustment, in general, the data will be greatly affected in the period close to the latest data, and less affected in the period far away from the latest data. For the convenience of users, the revised month-on-month data of the previous quarter will be released through the website of the National Bureau of Statistics of China while the month-on-month data of the current period is released.

4. Quarterly GDP data quality evaluation

4.1 Evaluation of basic data

Relevant departments will test the quality of specialized statistical data and administrative record data used in GDP accounting to ensure that the data reasonably reflects the actual situation of economic development. When the GDP accounting department gets these basic data, it will check the completeness and accuracy of the data again to ensure that these data meet the concept and requirements of GDP accounting.

4.2 Evaluation of accounting methods

In the GDP accounting, the GDP accounting department will revise the quarterly GDP accounting method according to the developing economic reality of China and the constantly improving national economic accounting standards, to ensure the rationality of the accounting method.

4.3 Evaluation of accounting results

After the quarterly GDP accounting results are obtained, it is necessary to check the coordination of the data of GDP components, the statistical data of GDP and related specialties and departments, and the macro data to ensure the coordination and matching of GDP data and other major data. A system is being established to evaluate the basic statistical data of various specialties and departments with national economic accounting as the core framework.

4.4 Comparability of data

The Chinese System of National Accounts (2016) adopted the basic accounting principles, contents, and methods of the United Nations System of National Accounts (2008), so the GDP data is internationally comparable.

Quarterly GDP historical data have been revised following the conduct of the national economic census or changes in calculation methods and classification standards so that the quarterly GDP time series since the first quarter of 1992 are comparable.

5. Quarterly GDP data release

5.1 Time of release

Preliminary quarterly GDP accounts are generally released around 15 days after the end of the quarter, and final quarterly GDP verifications are generally released in January of the next year. For the release of key statistical indicators, the NBS of China will state the release date in the Regular Press Release Calendar of NBS in 2024 issued at the beginning of the year, and the GDP data will be released according to the prescribed schedule.

5.2 Methods of release

Preliminary quarterly GDP accounts are published in the quarterly press conference on the operation of the national economy, on the website of the National Bureau of Statistics of China (www.stats.gov.cn), and in the China Monthly Economic Indicators. Final quarterly GDP verifications are published on the website of National Data of the National Bureau of Statistics of China (http://data.stats.gov.cn/), and the China Monthly Economic Indicators. The time series of quarterly GDP data since the first quarter of 1992 can be found on the website of National Data of the National Bureau of Statistics of China (http://data.stats.gov.cn/).