Gross National Product (GNP)   refers to the final result of the primary distribution of the income created by all the
resident units of a country (or a region) during a certain period of time. The value-added created by the resident units of a
country engaged in production activities is mainly distributed to the resident units of that country while a part of it is
distributed to the non-resident units in the form of production tax and import duties (minus subsidies to production and
import), remuneration for the labourers and property income. At the meantime, a part of the value-added created abroad is
distributed to the resident units of the country in the form of production tax and import duties (minus subsidies to production
and import), remuneration for the labourers and property income. Thus the concept of gross national product is formed, which
equals to gross domestic product plus net factor income from abroad. Unlike gross domestic product which is a concept of
production, gross national product is a concept of income.

Gross Domestic Product (GDP)   refers to the final products of all resident units in a country (or a region) during a certain
period of time. Gross domestic product is expressed in three different forms, i.e. value, income, and products respectively.
The form of value refers to the total value of all products and services produced by all resident units during a certain period of
time minus total value of intimidate input of materials and services of the nature of non-fixed assets or the summation of
the value-added of all resident units; the form of income includes all the income created by all resident units and distributed
primarily to all resident and non-resident units;  the form of products refers to the value of all final goods and services for
final use by all resident units plus the value of net exports of goods and services during a given period of time. In the
practice of national accounting, gross domestic product is calculated with three approaches, i.e. production approach, income
approach, and expenditure approach, which reflect gross domestic product and its composition from different aspects.

Three Industries   Industry structure has been classified according to the historical sequence of development. Primary
industry refers to extraction of natural resources; secondary industry involves processing of primary products; and tertiary
industry provides services of various kinds for production and consumption. The above classification is universal although it
varies to some extent form country to country. Industry in China comprises:

Primary industry:  agriculture (including farming, forestry, animal husbandry and fishery).

Secondary industry:  industry (including mining and quarrying, manufacturing, production and supply of electricity, water
and gas) and construction.

Tertiary industry:  all other industries not included in primary or secondary industry.

Due to the fact that tertiary industry involves in a large variety of industries in China, it is divided into two sectors: circulation
sector and service sector and further into four levels:

The first level: circulation sector, including transportation, storage, postal and telecommunications, wholesale and retail trade,
and catering trade.

The second level: service sector providing services for production and consumption, including banking, insurance, geological
survey, water conservancy management, real estates, service for residents, service for agriculture, forestry, animal husbandry,
fishery, subsidiary services for transportation and communications, comprehensive technical services, etc.

The third level: service sector for upgrading scientific, educational and cultural level of the people, including education, culture
and arts, broadcasting, movies, television, public health, sports, social welfare and scientific research, etc.

The fourth level: sector providing services for public needs, including government agencies, political parties, social
organizations, military and police service.

GDP Calculated with Expenditure Approach   refers to total expenditure on final consumption, total capital formation
and net export of goods and services by resident units of a country in a certain period of time. It reflects the composition of
GDP by its use.

Final Consumption   refers to the total expenditure of resident units on final consumption of goods and services in a
certain period, namely the expenditure of the resident units for purchases of goods and services from domestic economic
territory and abroad to meet the requirements of material, cultural and spiritual life. It excludes the expenditure of non-
resident units on consumption in the economic territory of the country. The final consumption is classified into household
consumption and government consumption.

Households Consumption   refers to the total expenditure of resident households on the final consumption of goods and
services. The households consumption is calculated at market prices, namely the purchasers prices which the households pay;
the purchasers prices of goods are the prices the households pay when they obtain the goods, including the transport and
commercial expenses paid by the households. In addition to the consumption of goods and services bought by the
households directly with money, the expenditure on goods and services obtained by the households in other ways, i.e. the
so-called imputed expenditure on consumption, is also included in the households consumption. The imputation expenditure
of the households on consumption includes the following types: (a) the goods and services provided to the households by the
units in the form of payment in kind and transfer in kind; (b) the goods and services produced and consumed by the
households themselves, in which the services refer only to the services provided by the residential buildings owned by the
households; (c) the services of financial intermediary provided by the financial institutions; (d) the insurance services
provided by the insurance companies.

Government Consumption   refers to the expenditure on the consumption of the public services provided by the
government to the whole society and the net expenditure on the goods and services provided by the government to the
households at free charge or lower prices. The former equals to the output value of the government services minus the value
of operating income obtained by the government departments. (The output value of the government services equals to its
current operating expenditure plus depreciation of fixed assets). The latter equals to the market value of the goods and
services provided by the government free of charge or at low prices to the households minus the value received by the
government from the households.

Total Capital Formation   refers to the fixed assets acquired minus those disposed and the change in inventory, including
the total fixed assets formation and the increase in inventory.

Total Fixed Capital Formation   refers to the value of fixed assets purchased, transferred in by the resident units and
those produced and used by themselves deducting the value of fixed assets sold and transferred out. It can be classified into
total tangible assets formation and total intangible assets formation. The total tangible assets formation include the value of
the construction projects, installation projects completed and the equipment, apparatus and instruments purchased as well as
the value of land improved, the value of draught animals, breeding stock, milk, wool and recreational animals and the newly
increased economic forest in a certain period. The total intangible assets formation includes the prospecting of minerals, the
acquisition of computer software, the originals of recreational works and works of literature and arts minus the disposal of
them.

Increase in Inventory   refers to the market value of the change in inventory, i.e. the difference of value between the
beginning and the end of the period.  The increase in inventory can be positive or negative. A positive value indicates the
increase in inventory while a negative value indicates the decrease in stock. The inventory includes the raw materials, fuels
and reserve materials purchased by the production units as well as the inventory of finished products, semi-finished products,
work-in-progress, etc.

Net Export of Goods and Services   refers to the difference of the exports of goods and services minus the imports of
goods and services.  The imports include the value of various goods and services sold or gratuitously transferred by the
resident units to the non-resident units. The imports include the value of various goods and services purchased or
gratuitously acquired by the resident units from the non-resident units. Because the provision of services and the use of them
happen simultaneously, the import and export of services do not appear to have the phenomena of crossing the border of
the country.  The acquisition of services by the resident units from abroad is usually treated as import while the acquisition of
services by non-resident units in this country is usually treated as export. The export and import of goods are calculated at
FOB.

Labourers Remuneration   refers to the whole payment of various forms earned by the labourers from the productive
activities they are engaged in. It includes wages, bonuses and allowances the labourers earned in monetary form and in kind.
It also includes the free medical services provided to the labourers and the medicine expenses, traffic subsidies and social
insurance fee paid by the labourers working units for them. As the individual economy is concerned, since the labourers
remuneration is not easily distinguished from the operating profit, both are treated as labourers remuneration.

Net Taxes on Production   refers to the residual of the taxes on production minus the subsidies on production. The taxes
on production refers to the various taxes, extra charges and fees levied on the production units on their production, sale and
business activities as well as on some factors of production, such as fixed assets, land and labour force, used in the
production activities they are engaged in. In contrast to the taxes on production, the subsidies on production refer to the
unilateral transfer of part of the governments revenue to the production units and is therefore regarded as negative taxes on
production. They include subsidies on the loss due to implementation of government policies, price subsidies to the grain
institutions, foreign trade corporations receipts from drawback, etc.

Depreciation of Fixed Assets   refers to the depreciation of fixed assets of a given period, drawn in accordance with the
stipulated depreciation rate for the purpose of compensating the wear loss of the fixed assets or the depreciation of fixed
assets calculated in a fictitious way in accordance with the stipulated unified depreciation rate in the national economic
accounting system. It reflects the value of transfer of the fixed assets in the production of the current period.  The
depreciation of fixed assets in various enterprises and institutions managed as enterprises refers to the depreciation
expenses actually drawn and calculated as part of the cost. In government agencies and institutions not managed as
enterprises which do not draw the depreciation expenses, as well as for the houses of residents, the depreciation of fixed
assets is the imputed depreciation, which is calculated in accordance with the stipulated unified depreciation rate. In principle,
the depreciation of fixed assets should be calculated on the basis of the re-purchased value of the fixed assets. However,
there is no actual condition to re-evaluate all the fixed assets in China. Therefore, the above-mentioned methods are
temporarily adopted at present.

Operating Surplus   refers to the balance of the value added created by the resident units deducting the labourers
remuneration, net taxes on production and the depreciation of fixed assets. It is equivalent to the business profit of the
enterprises plus subsidies on production, but the wages and welfare expenses paid from the profits should be deducted.

Direct Input Coefficient   refers to the volume of products and services of all sectors consumed directly by a certain
sectors productive units, which are needed for their total output. It is also named as technical coefficient. It represents the
direct technical economical ties and direct interdependence between the sector and other sectors.

Total Input Coefficient   refers to the volume of products and services of all sectors needed for a certain sectors
productive units to increase their total output. Total input coefficient is equal to the sum of direct input coefficient and total
indirect input coefficient. It is a major indicator to disclose the technical economical ties and interdependence between sectors
of the national economy.

Institutional Units   refer to economic entities that are in a position to own assets and incur liabilities in their own name,
and to engage in economic activities and conduct transactions with other entities. Depending on their different role in
production, consumption and financing, 4 groups of resident institutional units are identified in the flow of fund tables,
namely, non-financial corporations, financial institutions, governments, households and the rest of the world.

Institutional Sectors   refer groups of institutional units that are classified by their nature. Following groups (or institutional
sectors) are identified in the flow of fund accounts: the sector of non-financial corporations, the sector of financial institutions,
the sector of governments and the sector of households.

Non-Financial Corporations and the Sector of Non-Financial Corporations   Non-financial corporations refer to
resident corporations that are engaged in the production of goods and the provision of non financial services in the market,
mainly covering corporate enterprises of various types. All non-financial corporations make up the sector of non-financial
corporations.

Financial Institutions and the Sector of Financial Institutions   Financial institutions refer to resident institutions that
are engaged in the financial services or auxiliary financial activities, mainly covering central banks, commercial banks, policy-
related banks, non-banking credit institutions and insurance companies. All financial institutions make up the sector of
financial institutions.

Government Units and the Sector of Governments   Government units refer to legal entities and their auxiliary units
within the territory of China that are established through political process and are empowered with legislative, administrative
or judicial rights over other institutional units in a given region. The main function of government units is to acquire funds
through taxation or other means, to provide public services to the society and households, and to conduct redistribution of
income and properties of the society through transfer payment. Government units cover mainly administrative and
institutional units of various types.  All government units make up the sector of governments.

Households and the Sector of Households   Households refer to resident individuals or groups of resident individuals
who share common living facilities, pool together entire or part of their income and properties at their common disposal, and
share their housing, food and other consumer goods and services. All households make up the sector of households.

Non-resident Units and the Sector of the Rest of the World   Non-resident units refer to of units that are of a non-
resident nature. All non-resident units that have transactions with resident units make up the sector the rest of the world.

Total Income of Primary Distribution    Primary distribution refers to the distribution of value-added in the form of
compensation for labours, depreciation of fixed assets, production taxes and property income. The sum of income obtained
through primary distribution is called the total income of primary distribution.

Current Transfers   include 4 parts: income tax, payment to social securities, social allowances and other current transfers.

Total Disposable Income   refers to income received by institutional sectors on the basis of total income of primary
distribution and through current transfers. This is the income that is used for final consumption and savings.

Total Savings   is the difference between total disposable income and the final consumption.

Capital Transfer   refers to the free payment from one sector to another sector for capital formation, and is a transaction
that seeks no return from the recipient. The capital transfer differs from the current transfer in 2 aspects. Firstly, the objective
of the transfer is investment rather than consumption. Secondly, capital transfer features the transfer of the ownership of the
capital rather than the utilization right of the capital. Capital transfer includes investment subsidies and other capital
transfers. Under the current situation in China, investment subsidies refer to investment allocations from government finance,
i.e.  the financial allocations that are used for capital construction, updating and transformation projects and other investment
in fixed assets.

Net Financial Investment   refers to total savings plus the net income from capital transfer minus the gross capital
formation from the point of view of physical transaction. In terms of monetary transaction, it is the increased value of
financial assets minus the increase of the financial liabilities.

Currency in Circulation   refers to currency that is in circulation in the market, including notes and fractional currency.

Savings Deposit   refers to deposits of all types, including current deposit, fixed deposit, household savings deposit,
government deposit, foreign exchange deposit and other deposits.

Loans   refer to loans of all forms provided by financial institutions to non-financial sectors, including short-term loans,
medium and long-term loans, government loans, foreign exchange loans and other loans.

Securities   include bonds and stocks.

Insurance Reserve Funds   refer to reserve fund for life insurance, the net pension fund, advance payment of premium
and non-claimed reserves.

Settlement Fund   refers to bank fund that is in the process of remittance.

Transactions Between Financial Institutions   refer to flow of capital between financial institutions, including inter-bank
deposits and loans.

Reserve Funds   refer to savings of financial institutions in the central bank and designated reserves to the central bank.

Loans from the Central Bank   refer to loans from the central bank to financial institutions.

Current Account   includes goods, services, earnings and current transfers.

Goods   refer to imported or exported goods through Chinese customs. Figures in the Yearbook are based on customs
statistics, adjusted in line with the concepts and definitions of the balance of payment statistics and with the change in the
ownership of commodities. Statistics on both exports and imports are valued at f.o.b. prices.

Services   include transportation, tourism, communications, construction, insurance, international financial services,
computer and information service, royalty for patent, trademarks and other special rights, commercial services, personal
cultural and recreational services and government services.

Earnings   include compensation of employees and earnings from investment (including earnings from and expenses on
direct investment, security investment and other investment, as well as reinvestment of earnings from direct investment).

Capital Account   includes capital transfers such as immigration transfer, reduction or exemption of debts, etc..

Financial Account   includes direct investment, security investment and other investments.

Direct Investment   refers to investment, made in forms of exclusive investment, joint investment, contracted operation
and cooperative development, by foreign investors or investors from Hong Kong, Macao and Taiwan in China, or by Chinese
investors in foreign countries or in Hong Kong, Macao and Taiwan.

Security Investment   refers to the purchase of stocks and securities issued by central and local governments and
enterprises in China by institutions or individuals of foreign countries or from Hong Kong, Macao and Taiwan ( and the re-
purchase by Chinese institutions), and the purchase and selling of stocks and securities issued in foreign countries and in
Hong Kong, Macao and Taiwan by Chinese governments, enterprises and individuals.

Other Investment   includes trade credits, loans, currency, savings and other assets, provided by foreign countries to China
and by China to foreign countries.

Reserve Assets, Net Increase   refers to the net balance between the end of the reference year and the end of the
previous year, in the gold reserve, foreign exchange reserve, special drawing rights in the International Monetary Fund, and
the use of the Funds credits. The increase in the reserve assets is expressed as a negative figure.