Industry refers to the material production sector which is engaged in extraction of natural resources and processing and
reprocessing of minerals and agricultural products, including (1) extraction of natural resources, such as mining, salt
production (but not including hunting and fishing); (2) processing and reprocessing of farm and sideline produces, such as
rice husking, flour milling, wine making, oil pressing, silk reeling, spinning and weaving, and leather making; (3) manufacture
of industrial products, such as steel making, iron smelting, chemicals manufacturing, petroleum processing, machine building,
timber processing; water and gas production and electricity generation and supply; (4)repairing of industrial products such as
the repairing of machinery and means of transport (including cars).

Units of industrial statistics survey corporate industrial enterprises with independent accounting system.

Corporate industrial enterprises with independent accounting system refer to enterprises engaging in industrial production
activities, which meet the following requirements: (1)They are established legally, having their own names, organizations,
location, able to take civil liability; (2)They possess and use their assets independently, assume liabilities, and are entitled to
sign contracts with other units; (3)They are financially independent and compile their own balance sheets.

Enterprises covered in the industrial statistics in the Yearbook include following categories by their registration:

State-owned and State-holding Enterprises refer to state-owned enterprises plus state-holding enterprises. State-
owned enterprises (originally known as state-run enterprises with ownership by the whole society) are non-corporate
economicentities registered in accordance with the Regulation of the People’s Republic of China on the Management of
Registration of

Legal Enterprises, where all assets are owned by the state. Included in this category are state-owned enterprises, state-funded corporations and state-owned joint-operation enterprises. Joint state-private industries and private industries, which
existed before 1957, were transformed into state-run industries since 1957, and into state-owned industries after 1992.
Statistics on those enterprises are included in the state-owned industries instead of grouping them separately. State-holding
enterprises is a sub-classification of enterprises with mixed ownership, referring to enterprises where the percentage of state
assets (or shares by the state) is larger than any other single share holder of the same enterprise. This sub-classification
illustrates the control of the state over a particular industry.


Collective-owned Enterprises refer to economic entities registered in accordance with the Regulation of the People’s
Republic of China on the Management of Registration of Legal Enterprises, where assets are owned by collectively. Collective
enterprises constitute an integral part of the socialist economy with public ownership. They include urban and rural
enterprisesinvested by collectives, and some enterprises registered in industrial and commercial administration agency as
collective units where funds are pulled together by individuals who voluntarily give up their right of ownership.

Share-holding Cooperative Enterprises refer to economic units set up on cooperative basis, with funding partly from
members of the enterprise and partly from outside investment, where the operation and management is decided by the
members who also participate in the production, and the distribution of income is based both on work (labour input) and on
shares (capital input).

Joint-operation enterprises refer to economic units that are established by joint investment by two or more corporate
enterprises or institutions of the same or different types of ownership on voluntary, equal and mutual-beneficial basis. They
include:

a) state-owned joint-operation enterprises (joint operation between state-owned enterprises);

b) collective joint-operation enterprises (joint operation between collective enterprises; and

c) state-collective joint-operation enterprises (joint operation between state and collective enterprises).

Limited Liability Corporations refer to economic units registered in accordance with the Regulation of the People’s
Republic of China on the Management of Registration of Corporations, with capitals from 2 to 49 investors, each investor
bears limited liability to the corporation depending on his/her holding of shares, and the corporation bears liability to its debt
to the maximum of its total assets.

Share-holding Corporations Ltd. refer to economic units registered in accordance with the Regulation of the People’s
Republic of China on the Management of Registration of Corporate Enterprises, with total registered capitals divided intoequal
shares and raised through issuing stocks. Each investor bears limited liability to the corporation depending on the holding of
shares, and the corporation bears liability to its debt to the maximum of its total assets.

Private Enterprises refer to economic units invested or controlled (by holding the majority of the shares) by natural
persons who hire labours for profit-making activities. Included in this category are private limited liability corporations, private
share-holding corporations Ltd., private partnership enterprises and private sole investment enterprises registered in
accordance with the Corporation Law, Partnership Enterprise Law and Tentative Regulation on Private Enterprises.

Enterprises with Funds from Hong Kong, Macao and Taiwan refers to all industrial enterprises registered as the joint-
venture, cooperative, sole (exclusive) investment industrial enterprises and limited liability corporations with funds from Hong
Kong, Macao and Taiwan.

Foreign Funded Enterprises refers to all industrial enterprises registered as the joint-venture, cooperative, sole
(exclusive) investment industrial enterprises and limited liability corporations with foreign funds.

Enterpries with Hong Kong, Macao, Taiwan and foreign fund refer to all the enterpries with funds from Hong Kong
Macao and Taiwan and foreign funded enterprises.

Light Industry refers to the industry that produces consumer goods and hand tools. It consists of two categories,
depending on the materials used:

(1) Industries using farm products as raw materials. These are branches of light industry which directly or indirectly use farm
products as basic raw materials, including the manufacture of food and beverages, tobacco processing, textile, clothing, fur
and leather manufacturing, paper making, printing, etc.

(2) Industries using non farm products as raw materials. These are branches of light industry which use manufactured goods
as raw materials, including the manufacture of cultural, educational articles and sports goods, chemicals, synthetic fiber,

chemical products for daily use, glass products for daily use, metal products for daily use, hand tools, medical apparatus and
instruments, and the manufacture of cultural and clerical machinery.

Heavy Industry refers to the industry which produces capital goods, and provides various sectors of the national economy
with necessary material and technical basis. It consists of the following three branches according to the purpose of production
or the use of products:

(1) Mining, quarrying and logging industry refers to the industry that extracts natural resources, including extraction of
petroleum, coal, metal and non-metal ores.

(2) Raw materials industry refers to the industry that provides various sectors of the national economy with raw materials,
fuels and power. It includes smelting and processing of metals, coking and coke chemistry, chemical materials and building
materials such as cement, plywood, and power, petroleum refining and coal dressing.

(3) Manufacturing industry refers to the industry that processes raw materials. It includes machine-building industry which
equips sectors of the national economy, industries of metal structure and cement products, industries producing means of
agricultural production, such as chemical fertilizers and pesticides.

According to the above principle of classification, the repairing trades, which are engaged primarily in repairing products of
heavy industry are classified into heavy industry while these engaged in repairing products of light industry are classified into
light industry.

Gross Industrial Output Value

(1) Definition: Gross industrial output value is the total volume of final industrial products produced and industrial services
provided during a given period. It reflects the total achievements and overall scale of industrial production during a given
period.

(2) Principles for calculation:

Statistics on industrial production follow the principle that all products produced by the enterprises and accepted during the
reference period are to be included no matter whether they are sold or not during the reference period.

Determination of final products follow the principle that all products that are included in the calculation of grow industrial
output value are the final products of the enterprise which have been accepted through quality check and require no further
processing. If an enterprise has intermediate (semi-finished) products to sell, these intermediate products are considered as
the final products of the enterprise.

Gross industrial output value is calculated following the principle of factory approach, i.e. industrial enterprise is used as the
basic accounting unit in calculating the gross industrial output value. By this approach, value of the same product is not to be
double counted, and the output value of different workshops (branch factories) should not be added. However, this approach
does not exclude the possibility of double counting between enterprises.

(3) Content and calculation method: The old definition of gross industrial output value was modified during the national
industrial census in 1995. The revised (new) definition of gross industrial output value consists of 3 components: value of the
finished products during the reference period, income from external processing, and value of change in semi-finished
products at the end and at the beginning of the reference period.

Value of the finished products during the reference period: refers to the value of all finished (semi-finished) industrial
products that are produced during the reference period without the need for further processing, checked for acceptance,
packed and put into the warehouse of the enterprise, including the value of own-produced equipment and the value of
products provided to the projects under construction of the enterprise, and to other non-industrial or welfare units. Value of
finished products during the reference period is calculated by the quantity of products produced using own materials multiplied
by the average unit prices at which products are sold (excluding value-added tax). Own-produced equipment and products
produced for own use are value at cost prices as in the case of enterprise accounting. Value of finished products does not
include the value of finished products (semi-finished products) that are produced using the materials from the clients who
make the orders.

Income from external processing: refers to income from contracted external processing of industrial products (including
processing of industrial products using materials from the clients), and the income from industrial repairing work provided to
other units. Income from external processing is calculated using information from the item “products sales income” in the
enterprise accounting at the prices excluding value-added tax.

For income from services such as processing, repairing and installation of equipment provided to non-industrial units within
the enterprise, if the accounting work of the enterprise is good enough to separate it from other records, and the share of

such services is significant, it should also be included in the income from external processing.

Value of change in semi-finished products at the end and at the beginning of the reference period: refers to the value of
change in semi-finished products at the end and at the beginning of the reference period, which generally can be obtained
from accounting records of enterprises. If the enterprise accounting excludes the cost of semi-finished products, then it
should not be included in the gross industrial output value, and vice versa.

(4) Changes in the coverage and method of calculation of gross industrial output value

Prior to 1984, the value of rural industry run by villages was classified into agriculture instead of industry. Since 1984, it has
been included in the gross industrial output value. Method of calculation for the gross industrial output value was modified in
the industrial census in 1995. The difference in the new method as compared with the old one is outlined below:

Principle in using full value vs. processing fee: The new method stipulates that all products produced using own materials are
to be calculated with full value in reporting the gross industrial output value irrespective of sophistication of production, and
for external processing, it allows calculation using processing fee. In the old method, however, the use of full value or
processing fee was determined by the degree of sophistication of production in different branches of industries.

Principle in determining the value of change in semi-finished products: The new method requires that value of the change in
semi-finished products should be included in the gross industrial output value if it is included in the accounting record of the
enterprise, otherwise it should not be included. By the old method, it is determined by the type of enterprises in terms of
production cycle. If the production cycle is over 6 months, the value of change in semi-finished products is included in the
gross industrial output value, otherwise it is excluded.

Difference in prices: The new method uses prices excluding value-added tax in the calculation of gross industrial output
value, while the old method used prices including value-added tax.

Value-added of Industry refers to the final results of industrial production of industrial enterprises in money terms during
the reference period.

Industrial value-added can be calculated by two approaches: the production approach, i.e. gross industrial output value minus
intermediate input plus value-added tax, and the income approach, i.e. income for various factors used in the course of
production, including depreciation of fixed assets, remuneration of labourers, net of production tax, and operating surplus.
Value-added of industry in the Yearbook is calculated by production approach as following:

Value-added of industry = gross industrial output industrial intermediate input + value-added tax

(1) Gross industrial output: refers to the total achievements of industrial production during a given period. Gross industrial
output includes value of finished products, income from external processing, and value of change in semi-finished products at
the end and at the beginning of the reference period. Since 1995, it was substituted by the gross industrial output value by
new method.

(2) Industrial intermediate input: refers to purchased goods and paid services consumed during the industrial production of
enterprises. Fees paid for services include fees paid for the services provided by material production sectors (industry,
agriculture, wholesale and retail trade, construction, transport, post and telecommunications) and by non-material production

sectors (insurance, banking, culture, education, scientific research, health and medical care, public administration, etc.). The
determination of industrial intermediate input follows the principle that the goods and services must be purchased from
outside and included in the gross industrial output, and that the goods and services are inputted into production and
consumed (include low-value consumables) during the reference period.

Industrial intermediate input includes 5 components, namely direct consumption of materials, industrial intermediate input in
manufacturing cost, industrial intermediate input in management cost, industrial intermediate input in marketing cost and
expenditure on interest.

Total Assets refer to all economic resources, in monetary terms, that is owned or controlled by enterprises, including
properties, creditors equity and other economic rights of all forms. Classified by the degree of equitability, total assets include
circulating assets, long-term investment, fixed assets, intangible assets and deferred assets, and other assets. Data on this
indicator can be obtained by the year-end figures of total assets in the Assets and Liability Table of accounting records of
enterprises.

Working Capitals refer to capitals that an enterprise can cash or use during one year or one production cycle that may
exceeds one year, including cash and savings deposits of various forms, short-term investment, money receivable and
prepaid money, inventories, etc.

Annual Average Value of Working Capitals refers to the average value of all working capitals of the enterprise during
the reference period.

Original Value of Fixed Assets refers to the total value, in monetary terms, that an enterprise spent on fixed assets,
through construction, purchase, installation, transformation, expansion or technical upgrading. Generally, it covers cost of
purchase, packing, transportation and installation, etc.

Annual Average of Net Value of Fixed Assets refer to average of the net value of fixed assets during the reference period,
calculated with the following formula:

Annual Average of Net Value of Fixed Assets = sum of net value of fixed assets at the beginning and at the end of each
month from January to December / 24.

Information on this indicator can be obtained from the beginning and ending figures of the original value of fixed assets and
cumulative depreciation from the Assets and Liability Table of enterprises.

Net value of fixed assets refers to the original value of fixed assets minus depreciation over the years, i.e.:

Net value of fixed assets = original value of fixed assets cumulative depreciation

Total Liabilities refer to payable liabilities of enterprises that have to repay in terms of money, assets or labour services.
In terms of payment, it can be divided into liquid liabilities and long-term liabilities. Data on this item is obtained from the
ending figures on total liabilities from the Assets and Liability Table from the enterprises.

Owner’s Equity refers to the ownership of net assets of enterprise by its investors. The net assets equal the total assets
minus total liabilities of the enterprise, including the actual assets invested into the enterprise by investors, accumulation of
capitals and operating surplus and non-distributed profits. The enterprise’s assets is less than its liabilities if the sum of
owner’s equity is smaller than zero.

Revenue from Principal Business refers to the annual accumulation of corresponding item in the “profit table” of the
accountant. For enterprises that do not follow the 2001 Enterprise Accounting Standards, the year-end accumulation of
revenue from the sales of products is used as a substitute.

Cost of Principal Business refers to the annual accumulation of corresponding item in the “profit table” of the accountant.

For enterprises that do not follow the 2001 Enterprise Accounting Standards, the year-end accumulation of cost for the sales
of products is used as a substitute.

Tax and Extra Charges from Principal Business refer to the annual accumulation of corresponding item in the “profit
table” of the accountant. For enterprises that do not follow the 2001 Enterprise Accounting Standards, the year-end
accumulation of tax and extra charges from the sales of products is used as a substitute.

Total Profits refer to the final achievements of production and operation of the enterprises, represented by the total profits
after deducting losses (loss is expressed by the negative figure). It is the sum of profits from operation, income from

subsidies, investment earnings, net income from activities other than operation, and adjustment of profits and losses of

previous years.

Value-added Tax Payable refers to the amount of the value-added tax which should be paid by the enterprises during the
reference period. It is the sum of tax on sales, export rebate, and transferred tax on purchases of the current year, minus
the tax on purchases of the current year. Value-added tax payable of small-size enterprises is determined by the taxable
sales of the year multiplied by the tax rate.

Average Annual Number of Employed Persons Employed persons refer to all those who are employed in
enterprises and receive remunerations therefrom, including currently working employees, retirees who are re-employed,

teachers of local-run schools, as well as foreigners, staff from Hong Kong, Macao and Taiwan, part-time employees and

persons with second job who are employed by the enterprise, and employees of other units temporarily working in the
enterprises, but excluding former employees who left the enterprise with their employment records still kept by the
enterprises.

Average number of employed persons refers to the number of employees everyday during the reference period,
calculated with the following formula:

Monthly average number = sum of actual employees everyday in reference month/number of calendar dates in reference
month

Quarterly average number = sum of monthly average number in reference quarter/3

Annual average number = sum of monthly average number in reference year/12

Ratio of Profits, Taxes and Interests to Average Assets reflects the profit-making capability of all assets of the enterprise and
is a key indicator manifesting the performance and management and evaluating the profit-making potential of the
enterprise. It is calculated as follows:

Ratio of Profits, Taxes and Interests to Average Assets (%) = [(total profits + total taxes + interest payment) / average
assets ]×100%

In the above formula, total taxes is the sum of tax and extra charges on the sales of products and value-added tax payable;
and average assets is the arithmetic mean of the sum of beginning assets and ending assets.

Ratio of Debts to Assets reflect both the operation risk and the capability of the enterprise in making use of the capital from
the creditors. It is calculated as follows:

Ratio of Debts to Assets (%) = (total debts / total assets)×100%

Both assets and debts are figures at the end of the reference period.

Turnover of Working Capitals refers to the number of times of turnover of working capital in a given period of time, which
reflects the speed of the turnover of working capital of industrial enterprises, and is calculated as follows:

Turnover of Working Capital=(sales revenue of products) / (average balance of total working capital)

In the above formula, average balance of total working capital refers to the arithmetic mean of the sum of working

capital at the beginning and at the end of the reference period.

Ratio of Profits to Total Industrial Costs refers to the ratio of profits realized in a given period to the total costs in the
same period, which reflects the economic efficiency of input cost and is calculated as follows:

Ratio of Profits to Total Industrial Cost (%)=(total profits/ total costs)×100%

Total costs in the above formula is the sum of cost of products sold, marketing cost, management cost and financial cost.

Overall Labour Productivity is an indicator reflecting the production efficiency of an enterprise and the economic efficiency of
its labour input, calculated by the formula:

Overall Labour Productivity (yuan/person) = industrial value-added / average of all persons engaged

Sales Ratio of Products is an indicator reflecting the actual sale of industrial products, analyzing the production-selling and
supply-demand relations. It is calculated as:

Sales Ratio of Products (%) = value of industrial sales / gross industrial output value (current prices) * 100%