GDP Quarter on Quarter

China Gross Domestic Product Quarter on Quarter reflects the market value of all goods and services produced by all China residents during a given quarter compared to the previous one. GDP is the main indicator of the national economy state and an important indicator of the country’s level of development.

There are three approaches to the calculation of GDP: from production perspective, in terms of revenues received and in terms of expenditures incurred.

• The production approach is based on the calculation of added value (intermediate costs are subtracted from the final price of produced goods).
• Income based calculation provides a value added sum of four components: employee compensation, net production taxes, deprecation of fixed assets and operating surplus.
• Expenditure approach uses the outlook for the final result of production activity. This includes final expenditure on consumption, gross capital formation and net exports of goods and services.

The National Bureau of Statistics of China calculates GDP using a production approach. It takes into account all paid goods and services produced in the country. Natural factors of potential goods growth (such as natural reproduction of wild plants or of fish in the sea) are excluded from the calculation. Data on Hong Kong, Macao and Taiwan GDP are excluded from the calculation.

Production sectors are classified in two ways: according to the national industrial classifier and according to the level of processing (primary industry – agriculture and forestry, fishing; secondary industry – mining, industrial production and energy; tertiary sector – service industry).

GDP is calculated based on data collected from statistical reports from different sectors, as well as by collecting administrative data (from tax authorities, the Ministry of Finance, Insurance Regulatory Commission, the People’s Bank of China, etc.).

A deflator is used in the value added calculation for different sectors. Also, data is seasonally adjusted (i.e. calculation excludes holidays, climate change, less working days or annual leave schedules).

GDP growth indicates a favorable economic situation and can have a positive effect on yuan quotes.