Broken Abacus? by Rosen Daniel;Bao Beibei; & Beibei Bao

Author:Rosen, Daniel;Bao, Beibei; & Beibei Bao
Language: eng
Format: epub
ISBN: 9781442240858
Publisher: Center for Strategic & International Studies
Published: 2015-08-19T00:00:00+00:00

A Bottom-Up Approach For the bottom-up approach for service subsectors, we leveraged the same strategy we used for the secondary sector. According to the NBS national accounts manual renewed in 2010, the officially preferred approach to count service VA is the income approach, from which we draw our recalculation formulas, paired with basic data from the Economic Census database:

1. Service value-added = Operating income92 + Current-year depreciation93 + Net taxes on production + Labor remuneration

2. Net taxes on production = Principal business taxes and surcharges + Amount of net taxes on production in operating, administrative, and financial fees94

3. Labor remuneration = Wage and employee benefits payable ÷ Share of that payable to labor Remuneration at administrative accounting−based entities

Applying this set of formulas to our cleaned-up databases, we were able to compute industry-level VA for all subsectors except education, public administration and social organizations, and finance. Basic data for these subsectors are extremely spotty in the database. When aggregated, the recalculated education VA is RMB 126 billion versus the official claim of RMB 890 billion. This is most likely caused by the evolving nature of China’s education service conditions. Previously, education service providers mainly relied on government grants, but an expanding portion of the subsector is increasingly living on the prices they charge for their services.95 The basic data the Ministry of Education (MOE) is able to collect through its own system is increasingly divorced from actual circumstances. A more reliable reference in this regard is the China Educational Finance Statistics Yearbook (zhongguo jiaoyu jingfei tongji nianjian), jointly compiled by MOE and NBS.96

According to government records, MOE’s financial statistics covered all educational establishments except for those provided by the Party schools, military schools, and Communist Youth League schools.97 Educational services by these entities are categorized as “other unspecified educational services” under China’s industrial classification 2002. Through the 2008 Economic Census Yearbook, we were able to compute the revenue ratio between “other educational services” and the entire educational subsector, which was about 5 percent. It should be noted that the “other education services” in the national industrial classification and the yearbook also include vocational and special education, so we assumed the educational services provided by the military, the Party, and the Youth League accounted for one-third of that 5 percent. With that newly calculated extrapolation ratio, we computed labor remuneration for the entire educational subsector—based on the ratio of wage and employee benefits to labor remuneration for educational workers in the 2008 Economic Census Yearbook —and used the relative ratios among the four income-approach components in the 2007 Input Output Tables (operating surplus, fixed asset depreciation, labor remuneration, and net taxes on production) to obtain a 2008 education value-added of RMB 943.7 billion, 6 percent higher than the official figure (Table 3.22).

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