China News Service:

Recently, officials from your bureau mentioned that the bureau was calculating statistics of the new economy. My question is, when will the results of the survey be published and how will they affect the GDP figures? The other question is regarding the flood in 28 provinces in China. How will that affect GDP? Thank you.

Sheng Laiyun:

Thank you for your attention to the GDP calculation method of the Bureau of Statistics. I will answer the question about the flood first. There has been frequent and extensive flooding in the region. We have been having abnormal weather this year. We see more extreme weather than before. We have not received the specific monitoring data regarding the degree of this flooding's impact, but we have called for statistics agencies to increase monitoring efforts. We have not yet put together these statistics. However, based on our investigation, the flooding has produced some effect on production, people's livelihood and environmental protection. In the short-term, some areas hit hard were negatively affected. In the medium and long-term, these areas might easily recover from the negative effects. For example, people have worried whether vegetable prices will rise. In the short-term, the vegetable supply in these areas will be affected and their prices may rise. However, the weather is getting warmer and vegetable grows quickly. After the flood waters subside, the affected area can quite quickly restore production and resolve the issue of vegetable supply. Regarding other issues, for example, economic growth, there is some pressure. However, large-scale reconstruction in the wake of the floods constitutes another factor to speed up economic growth.

Regarding statistics about the new economy, I have some opinions. First, it is our bureau's duty to monitor the new economy and report on it. In recent years, the new economy has grown quickly, both at home and abroad. Many governments have paid attention to the cultivation of the new economy and its development. Our country puts a lot of importance on reform and innovation and on enhancing innovation. Therefore, the new economy, characterized by new industries, new business forms and new commercial models, develops very fast. Its growth has somewhat offset the downward pressure on the industry and other sectors. And such a growth is beneficial for China's economic transformation and maintenance of economic growth. So, we need a clear picture of the new economy. We need to know exactly how big it is and how much it may contribute to economic growth in order to reflect more objectively on the shift from old growth drivers to new ones.

Second, our bureau attaches more importance to reform and innovation. We have set up relevant institutions and statistical methods, such as the system in the hi-tech industry, in the e-business sector and the online shopping sector. We will try our best to reflect the results of the new economy in the GDP. Based on previous reforms, this year we will make greater efforts to reform and innovate, and after summarizing the experience we formed what we called the "Three New" survey system on new industries, new business forms and new commercial models. The system covers almost all sectors of the new economy, such as the hi-tech industry, the strategic new industry, the hi-tech service industry, internet finance, science and technology incubators, mass innovation space and crowd-funding, city complex and local development parks. We will collect relevant data. In April we assigned the survey to the local government, and expected primary data to be reported at the end of July.

Third, the calculation of new industries, new business forms and new commercial models is not a totally new GDP calculation method. We had no intention of making the GDP figure bigger than what it really was. The new method is related to the current one, but there are differences. The three new sectors are a part of our economic activities, so it's right to include them into the GDP. Normally, the calculation of GDP is based on transactions with exchange of value, while the calculation of these three sectors concerns both transactions with or without value. There is no doubt that the transactions with exchange of value should be included into the GDP, and transactions without exchange of value should not be included. Take online shopping for example. Some websites offer free services, and this is a kind of new economic activity. According to previous calculation methods, if there is no exchange of value, it can't be calculated into GDP. But there is a problem. Most transactions with exchange of values in the three new sectors have been calculated into GDP, but due to the categorization method and the mixed business structures, we can't tell which sector they belong to. Currently, economic figures are contributed by individual legal entities and calculated into the sector of their primary businesses. For example, a large steel enterprise may have R&D business, logistics business and other new economic activities in addition to steel production. Its R&D centers may also offer services to others. However, when calculating GDP, all output of its economic activities has to be included in the steel sector. What we are doing now is making a clearer definition, calculating what ought to be calculated and better reflecting new economic activities in the GDP. Our goal is that when a conglomerate is concerned, we can tell which revenue comes from its main business and which comes from new economic activities. We are simply including everything about new economic activities into GDP. We are trying to make things clearer.

Finally, any statistical research about new industries, new business forms and new commercial models is a hard undertaking as there is no universally accepted standard for these terms, which cover a wide array of dynamic areas. The National Bureau of Statistics is, to some extent, just exploring ways of conducting this kind of statistical survey in these three sectors and we are bound to beef up our efforts and improve our methods in the future. We are, as always, dedicated to reform and innovation in order to better reflect performances of new industries, new business forms and new commercial models as well as the development of new drivers of economic growth in an accurate and comprehensive manner. Based on our existing methods of surveys and investigations, we hope to learn from our past experience and overseas research results in order to improve our statistical work on this front. Opinions and suggestions are highly welcome. Thank you.

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