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I ; CURRENCY EQUIVALENTS The Chinese currency is called Renminbi (RMB). It is denominated in Yuan (Y). Each Yuan is I Yuan = 10 jiao = 100 fen In early 1984 the official exchange rate of the Yuan to the US dollar was around Y 2 = US$1. The internal settlement rate (ISR) of Y 2.8 = S1, however, was used in most merchandise transactions. The official exchange rate is now about Y 2.8 = $1. On January 1, 1985, the Government abolished the ISR. WEIGHTS AND MEASURES Chinese statistics are usually in metric units; in addition, mu and jin are often used: I mu = 0.1647 acres = 0.0667 hectares I jin = 0.5 kg FISCAL YEAR January 1 - December 31 TRANSLITERATION The Pinyin system is used in this report. TERMINOLOGY (1) With the recent reorganization of rural administration, "communes" have been replaced by "townships," and "production brigades and teams" by "villages." This report retains the former terminoLogy in one respect, however, by referring to "commune and brigade enterprises." (2) The term "national income" is used in this report to encompass both the Chinese measure (net material product) and the Western measure (gross national product). Where the context makes the distinction between these two measures important, they are more precisely identified. Note: In tables, individual items may not sum exactly to totals because of rounding errors. FOR OFFICIAL USE ONLY CHINA LONG-TERM ISSUES AND OPTIONS ANNEX E: CHINA'S ECONOMIC STRUCTURE IN INTERNATIONAL PERSPECTIVE Table of Contents Page No. 1. INTRODUCTION AND SUMMARY OF CONCLUSIONS .......................... I 2. SOURCES AND ADJUSTMENT OF CHINESE DATA .......................... 2 National Accounts ........................................... 2 Compilation of Input-Output Tables ...................... 3 Further Adjustment for International Comparability ...... 3 Sectoral Reclassification ........................... 3 Concealed Services .................................. 3 Price Adjustments ................................... 5 Effects of the Adjustments .............................. 5 Income Level ........................................ 5 Composition of Demand ............................... 6 Sectoral Shares of National Income .................. 6 Recent Changes .......................................... 9 Employment .........., , . .................. 9 Capital Stock ............................................... 11 3. INTERNATIONAL COMPARISONS ....................................... 11 Sources of Comparative Data ................................. 11 Composition of Demand ....................................... 12 Broad Aggregates ........................................ 12 Household Consumption ................................... 15 International Trade ......................................... 15 Production .................................................. 19 Structure ............................................... - 19 Determinants ............................................ 24 Employment .................................................. 25 Capital Stock ............................................... 28 Efficiency Indicators ................ ........................ 31 Consumption.of Key Materials ............................ 31 Intermediate Input Use .................................. 33 Use of Capital .......................................... 34 Total Factor Productivity Growth ........................ 37 I This document has a restricted distribution and may be used by recipients only in the performance ofr their oficial duties. Its contents may not otherwise be disclosed without World Bank authorization. Appendices Page No. A. Data Used in Compiling Input-Output Tables . . 41 B. Data Used in Adjusting Input-Output Tables . . 47 C. Detailed Input-Output Tables .. 53 D. Sources of Employment Data .. 63 E. Capital Stock Estimates .. 66 F. Demand-Production Linkage Calculations .. 70 G. Household Consumption Comparisons .. 76 H. Total Factor Productivity Growth .. 79 I. Personal Incomes and Incidence of Poverty ..... 81 J. Financial Estimates and Projections ........... 91 List of Tables in the Text 2.1 Summary 1981 SNA Input-Output Table ........................... 4 2.2 Composition of Demand after Adjustment, 1981 .................. 7 2.3 Sectoral Shares of National Income after Adjustment, 1981 ..... 8 2.4 Structural Change 1978-83 ..................................... 10 3.1 International Comparison of Demand Composition (Average Pattern) 13 3.2 International Comparison of Demand Composition (East Asia and East Europe) .............................................. 14 3.3 International Comparison of Household Consumption Structure... 16 3.4 InternationaL Comparison of Food Availability ................. 17 3.5 International Comparison of Foreign Trade ..................... 18 3.6 International Comparison of Production Structure (Broad Sectors) ................................................ 21 3.7 InternationaL Comparison of Production Structure CDetaiLed Sectors).. ..... .. ................................... 22 3.8 International Comparison of Employment Structure (Broad Sectors) ............................................... 26 3.9 International Comparison of Employment Structure (Detailed Sectors) ............................................ 27 3.10 International Comparison of Sectoral Net Output Per Worker .... 29 3.11 InternationaL Comparison of Capital Stock Composition ......... 30 3.12 International Comparison of Materials Use ..............se.... 32 3.13 International Comparison of Net-Cross Output Ratios (Broad Sectors) ....... ........ . . ................. .......... 35 3.14 International Comparison of Net-Gross Output Ratios (Manufacturing Sectors) ........ec.ts......................).. 36 3.15 International Comparison of Sectoral Capital-Output Ratios.... 38 3.16 International Comparison of Total Factor Productivity Growth.. 39 List of Tables in the Appendices A.1 Reconciliation with Official Data - Gross Output . . 42 A.2 Reconciliation with Official Data - Value Added . . 43 A.3 Housing Accounts .. 44 A.4 Passenger Transport Estimates ................................. 44 A.5 Miscellaneous Services Estimates ............................. . 45 A.6 Education and Health, etc. Estimates .. 45 A.7 Steps in Conversion from MPS to SNA Accounts, 1981 ............ 46 Page No. B.1 Adjustment for Concealed Services .50 B.2 Coefficients for Price Adjustment .51 B.3 Price Adjustment Coefficients for Intermediate Use of Refined Oil Products ......................................... 52 C.1 China: 1981 Input-Output Table in MPS .54 C.2 China: 1981 Input-Output Table in SNA .55 C.3 China: 1981 Input-Output Table in SNA (with mining subsectors separated) . . .57 C.4 China: 1981 Input-Output Table in SNA (adjusted for concealed services) . . .59 C.5 China: 1981 Input-Output Table in SNA (adjusted for concealed services and price differences) . . .61 D.1 Adjustment of Census Employment Data .64 D.2 Comparison of Census and Statistical Yearbook of China Employment Data .65 E.1 Estimated Sectoral Capital Stocks .67 E.2 Estimated Sectoral Capital Stocks (price-adjusted), 1981 .68 E.3 Increase in Stocks as Percentage of Total Gross Capital Formation, 1970-80 .69 F.1 Determinants of Prodaction Structure (China-India Experiment) ..72 F.2 Impact of China's Input-Output Coefficients on Intermediate Demands (China-India Experiment) . .73 F.3 Determinants of Production Structure (China-Japan Experiment) ..74 F.4 Impact of China's Input-Output Coefficients on Intermediate Demands (China-Japan Experiment) ................. 75 G.1 International Comparison of Household Consumption: National Accounts Data ..76 G.2a International Comparison of Urban Household Consumption Structure Based on Household Survey Data .77 G.2b International Comparison of Rural Household Consumption Structure Based on Household Survey Data .78 H. China: Estimated Total Factor Productivity Growth, 1952-81... 80 I.1 Provincial Urban Wages and Per Capita Incomes, 1982 .82 I.2 Provincial Personal Income Per Capita, 1982 .83 I.3 Energy and Protein Requirements .84 I.4 Urban and Rural Poverty Lines 85 I.5 Urban Income Distribution, 1981/82 .86 I.6 Rural Income Distribution, 1979-82 .87 I.7 Incidence of Poverty, 1979-827............ .. ....* ............. 88 I.8 Urban and Rural Income Distribution in Jiangsu, Hubei and Gansu, 1982 .89 I.9 Incidence of Poverty in Jiangsu, Hubei and Gansu, 1982 ........ 90 1. INTRODUCTION AND SUMMARY OF CONCLUSIONS 1.01 This annex attempts to compare the composition of demand, interna- tional trade, production, employment and capital stock in China with those in other countries, especially other large developing countries. It also attempts to assess the comparative efficiency of China's economy. (It does not make comparisons of income distribution and social indicators, which have been undertaken elsewhere - see Chapter 1 of the Main Report, Section D.) Section 2 of this annex describes the sources of our data for China, and how we adjusted them to increase their international comparability. Section 3 contains the international comparisons. Appendices present some of the under- lying data in more detail. It should be emphasized at the outset that the comparisons are subject to numerous conceptual and statistical problems des- pite our efforts to minimize these in various ways. The conclusions are thus inevitably tentative, and there is scope for much further research. 1.02 Even after making allowance for differences in national accounting conventions and prices, China's per capita national income is very low, but the composition of aggregate demand in China is most unusual by comparison with other low-income countries. The share of national income saved is extremelv high - well above the average for middle-income countries, and matched among large- and medium-sized countries only by Japan and the East Et.ropean socialist economies. The share of public consumption is also high in China. Household consumption is thus an unusually low proportion of China's national income; but its composition is quite similar to those of other Low- income countries, especially as regards the share of food. Nonetheless, mainly because grain constitutes an exceptionally high share of, food consump- tion, average caloric intake in China is that of a middle-income country. 1.03 China's exports and imports, relative to national income, have recently risen into the normal range for very large countries, but unlike most developing countries, which have substantial foreign trade deficits, China has in the past few years had a surplus of exports over imports. The composition of China's exports is similar to that of other low-income countries in one respect, namely a high share of textiles, but different from most other Low- income countries (except India) in that the share of other manufactures is unusually high and of primary products unusually low. The composition of China's imports is distinguished from that of most other developing countries by the absence of oil, which China exports. 1.04 China's unusual pattern of demand contributes to an unusual pattern of production. The high saving share makes it necessary to produce a large volume of investment goods, and hence manufacturing - especially heavy manu- facturing - accounts for an unusually large share of China's national income (similar to the average upper-middle-income country). The share of agricul- ture, by contrast, resembles that of a typical low-income country. The share of the infrastructure sectors is also similar to that of other low-income countries, but is small in relation to China's high investment rate and large manufacturing share. The share of the service sectors in China's national income is thus much smaller than in the typical low-income or middle-income country, despite an unusually large education and health sector. The low -2- overall service share is due mainly to the small shares of commerce, finance, and miscellaneous business and personal services. 1.05 Agriculture's share of total employment in China is very large - much as in other Low-income countries. The composition of nonagricultural employment, however, is rather different. The share of manufacturing in employment is higher than in the typical low-income country, but by less than its share in national income, since output per worker in manufacturing in China is unusually high (which in turn mainly reflects the unusually low share of labor-intensive consumer goods within the manufacturing sector). The share of services in employment in China is correspondingly lower than in the typi- cal Low-income country. Sectoral shares in China's fixed capitaL stock largely parallel those in production and employment, especially in respect of the high share of heavy manufacturing and the low share of commerce and mis- cellaneous services. 1.06 Although international comparisons of economic efficiency are particularly difficult, it appears that China's usage of intermediate material inputs - most conspicuously energy, but also other industrial and agricultural products - is unusualLy high. (Indeed, inefficient use of industrial interme- diate inputs appears just as important as the high saving rate in explaining the large share of industry in China's national income.) The data do not per- mit a firm conclusion about efficiency in the use of fixed capital, but the amount of circulating capital used in China appears unusually high. Moreover, total factor productivity growth (i.e. increases in the efficiency with which all inputs are used) appears to have been unusually slow in China, and to have contributed an exceptionally small proportion of output growth. 2. SOURCES AND ADJUSTMENT OF CHINESE DATA 2.01 Our main sources of Chinese data are the Statistical Yearbooks of China (SYC), 1981, 1983, 1984. Other sources include the World Bank's sector and economic reports, the Almanac of Chinese Economy (1981 and 1982), the Agricultural Yearbook of China (1980), and Chinese Statistical Abstract (1982). In addition, we benefited greatly from discussions with officials of the State Statistical Bureau, who clarified some of the concepts and practices in the Chinese statistical system. National Accounts 2.02 Because of different statistical coverage and practices, China's national accounts data had to be converted into a form more comparable to that of the other countries used as comparators. China's national income is mea- sured as the Material Product System (MPS) concept of Net Material Product (NMP), which is different from the Western System of National Accounts (SNA) concept of Gross Domestic Product (GDP). (See Appendix A text and Table A.7.) China's sectoral classification is different from the UN International Standard Industrial Classification, which is commonly used in other coun- tries. For example, data on mining are included with related manufacturing -3- industries. Chinese statisticians also currently include brigade- or team-run industrial enterprises as part of agriculture. The various adjustments needed for greater international comparability were made in the framework of input- output tables. Compilation of Input-Output Tables 2.03 Since no official Chinese input-output table was available, a table for 1981 was compiled on the basis of a variety of other published data (including the nationaL accounts, household expenditure surveys, and informa- tion on specific sectors such as agriculture and energy). Many gaps had to be filled by assumptions and guesswork. This was especially so for the matrix of intersectoral flows, and for the nonmaterial service sectors. Apparent incon- sistencies between data from different sources, revealed by the accounting logic of the input-output table, also had to be resolved arbitrarily. Some-of the underlying data and methods of estimation are presented in Appendix A, and the detailed input-output tables themselves are in Appendix C. The first table (Appendix Table C.1) is compiled in conformity with the MPS. The second one (Appendix Table C.2), which is a modified version of the first, accords with the SNA - Table 2.1 is a summary version of this table. Both these tables use the Chinese classification of sectors, except that brigade and team enterprises have been taken out of agriculture and spread among other sec- tors. (The second table, which was used in the model discussed in Annex D, divides agriculture proper into two subsectors.) Further Adjustment for International Comparability 2.04 Sectoral Reclassification. The Chinese sectoral classification, unlike the UN International Standard Industrial Classification (ISIC), does not treat primary extractive activities as a distinct category, although in most cases values are given for them. The same is true for logging, while "machinery" in the Chinese statistics is a very broad category, including most simple fabricated metal products as well as machinery and consumer durables. For greater international comparability, we therefore separated out mining, logging and metal products from their related industries, and created mining and metal products as distinct sectors, while including logging in agricul- ture. This involved some estimation from fragmentary sources. Appendix Table C.3 presents the reclassified input-output table. 2.05 Concealed Services. Using the yecently published census data on employment by occupation in each sector,- we investigated the possibility that the small size of China's service sector could be partly explained by service activities being concealed within other (especially industrial) sec- tors to a greater degree than in other countries. Comparing China's structure of employment by sector and occupation with those of other countries, it appears that the concealment of both material and nonmaterial service activi- ties in other sectors is in fact only slightly greater than in other coun- tries. Nevertheless, we made some rough adjustments, as explained in Appen- 1/ 1982 Census Report (10% sample), Table 34, pp. 342-347. Table 2.1: SUKHARY 1981 SMA INPUT-OUTPUT TABLE (Y billion) Agri- Indus- Con- Trans- INTER- Household Pubilc con- Invest- .7INAL GROSS culture try struction port Commerce NHS MEDIATE consumption suption ment /a Exports Imports DEMAND OUTPUT Agriculture 31.67 66.96 3.50 - 5.70 1.20 109.03 88.16 0.86 21.66 2.99 5.50 108.17 217.20 Industry Lb 24.35 241.04 44.77 7.06 14.78 24.81 356.81 115.64 15.42 47.35 29.51 28.94 178.98 535.80 Construction 0.50 6.35 4.00 4.00 0.10 1.15 16.10 - 2.10 56.90 - - 59.00 75.10 Transport /c 0.82 14.94 2.14 0.51 1.20 1.04 20.65 5.24 2.12 1.80 2.46 1.16 10.46 31.10 Comerce 1.15 14.92 1.61 0.76 1.04 1.77 21.26 25.94 0.27 2.65 3.44 1.46 30.84 52.10 Nonmaterial services /d 0.06 1.22 0.08 0.06 0.10 0.45 1.97 21.02 49.26 - - - 70.28 72.25 INTERMEDIATE USE 58.55 345.43 56.10 12.40 22.92 30.42 525.82 256.00 70.03 130.36 38.39 37.05 457.73 983.55 DeprecLation 2.05 11.87 0.80 3.30 0.88 5.30 24.20 Value added 156.60 178.50 18.20 15.40 28.30 36.53 433.53 GROSS OUTPUT 217.20 535.80 75.10 31.10 52.10 72.25 983.55 /S Fixed and circulating. /b Kining, manufacturing and electricity. /c Freight and passenger transport. /d Housing, education and health, public adminlitration and defense and miscellaneous services. Source: Appendix Table C.2. ' l -5- dix B. Appendix Table C.4 presents the input-output table adjusted for con- cealed services. 2.06 Price Adjustments. Though prices always vary to some extent from one country to another, the prices of many commodities in China appear to dif- fer substantially and consistently from those in most other low-income coun- tries. Thus, to make it easier to identify "real" structural differences and similarities between China and other countries, we attempted - roughly, and on the basis of very limited information - to correct for these price differen- ces. As explained in Appendix B, among the more significant adjustments made were large increases in energy prices, substantial increases in machinery prices, moderate increases in agricultural and construction prices, and reduc- tions in the prices of textiles and consumer durables. Suitable adjustment coefficienta were then applied to our input-output table and a new set of national accounts derived. The results are shown in Appendix Table C.5. 2.07 It is from this price-adjusted input-output table which incorporates all the other adjustments mentioned above that the China data in subsequent international comparative tables are drawn. Though undoubtedly inaccurate in many specific respects, the price-adjusted input-output table is probably less misleading as a basis for international comparison than any of the other tables. On the production side, as explained in more detail below, most of the adjustments tend to reduce the apparent differences between China and other countries (e.g. by decreasing the share of manufacturing, and increasing that of services); on the demand side, however, the adjustments tend to increase these differences (e.g. by raising the shares of investment and public consumption). Effects of the Adjustments 2.08 Income Level. The conversion from the MPS concept of national income to the wider SNA concept, including depreciation and the net output of nonmaterial services, increases national income considerably (Table 2.2) - but by almost the same amount as in the estimates reported in earlier World Bank reports on China (e.g. China: Socialist Economic Development (CSED), 1983). Conversion into dollars using official exchange rates and the World Bank Atlas methodology (explained in the Atlas, and in Annex A of CSED) suggests that China's per capita GNP in 1981 was about $300. 2.09 The adjustment of the input-output table for price differences (at the 1981 official exchange rate) between China and other low-income countries further increases China's estimated national income, though not by much - to about $350 on a per capita basis. These calculations thus tend to confirm the assessment in earlier World Bank reports (particularly CSED, Main Report, para. 3.31) that official-exchange-rate-based calculations of China's national income in the late 1970s and early 1980s gave a reasonably accura;7 impression of China's real income in relation to other low-income countries.= 2.10 However, the fragmentary and unsatisfactory nature of the data on which the price adjustments for 1981 were based should be emphasized. Other studies, using somewhat different price data, or interpreting the same data in different ways, have come out quite differently - some of them implying that China'w,real income is higher than the present estimate, others that it is lower._ It should also be noted chac China's official exchange race has changed substantially since 1981, the year to which the present estimate refers. In 1981. the official exchange rate was about Y 1.7 = $1.0; by early 1985, it was about Y 2.8 = $1.0, despite slower price inflation in China than in most other countries between 1981 and 1985. Official-exchange-rate-based calculations may thus now significantly underestimate China's real income. 2.11 Composition of Demand. Table 2.2 presents the composition of demand in 1981, expressed in percentages of national income, before and after adjust- ment. Figures in column (a) come directly from the Statistical Yearbook. Figures in coLumns (b)-(f) are based on the input-output tables, Appendix Tables C.1-C.5 respectively. Figures in (a) and (b) are in MPS while the rest are in SNA. The only difference between (a) and (b) is in the placing of the residual error (the difference between income and expenditure side estimates of national income). Columns Cc) and (d) are identical as the adjust-ienc from one to the other involves only reclassification of sectoral origins, leaving the uses of national income unchanged. 2.12 Conversion from MPS (b) to SNA (c) significantly altered the composition of demand. Household consumption dropped from 62.8% to 55.9%, while public consumption rose from 7.8Z to 15.3Z as the bulk of the added non- material services went into the latter, mainly in the form of education, health, public administration and defense. In (e), as we switched concealed nonmaterial services from material to nonmaterial sectors, the share of public consumption rose further at the expense of household consumption. The results of price adjustment are presented in (f), in which che household consumption share dropped further, to 53.0%, while the shares of public consumption and investment rose from 16.0% to 17.1% and from 28.4% to 30.1% respectively. (This is at variance with the World Bank's earlier conclusion regarding the impact of China's unusual prices on its investment share: CSED, Main Report, Table 3.10.) 2.13 Sectoral Shares of National Income. In the same fashion, Table 2.3 presents the sectoral shares of national income in 1981, before and after 2/ Use of official exchange rates, however, seems to greatly overstate the real income gap between poor countries and rich countries (I.B. Kravis and others, World Product and Income, World Bank, 1982). 31 Jeffrey R. Taylor, "Overview of Studies Comparing Prices in China with Prices in Other Countries," November 1984 (draft paper, Center for Inter- national Research, US Bureau of the Census). -7- Table 2.2: COMPOSITION OF DEMAND AFTER ADJUSTMENT, 1981 (Z of national income) /a /b /c &/d /e /f Household consumption 62.8 62.8 55.9 55.3 52.0 Public consumption 7.8 7.8 15.3 16.0 17.1 Investment 28.1 29.1* 28.5* 28.4* 30.1* Capital inflow -1.3* -0.3 -0.3 -0.3 -0.8 Saving 29.4 29.4 28.8 28.7 30.9 National income C%) 100.0 100.0 100.0 100.0 100.0 National income (Y billion) 394.0 394.0 457.7 457.7 527.7 I Includes residual error (difference between income and expenditure side estimates of national income). /a Directly from Statistical Yearbook (but expre.sed as ratios of national income rather than of national income available). /b MPS basis (with residual error added to investment, and brigade and team enterprises spread among appropriate sectors). Jc SNA basis (adjusted for depreciation and nonmaterial services). /d Mining and logging separated from industrial sectors. /e Further adjusted for concealed services. /f Further adjusted for price differences. Source: /a Statistical Yearbook of China (SYC), 1983, pp. 22 and 25-26. 76-/f Appendix Tables C.1-C.5 -8- Table 2.3: SECTORAL SHARES OF NATiONAL INCOME AFTER ADJUSTMENT, 1981 (Z) /a /b /c /d /e /f Agriculture 42.1 39.7 34.7 34.9 34.7 35.8 Industry 43.4 45.3 41.7 41.4 40.7 37.9 Of which: Mining N.A. N.A. N.A. 5.0 4.9 10.8 Heavy manufacturing * N.A. N.A. N.A. 19.3 19.0 16.4 Light manufacturing ** N.A. N.A. N.A. 14.5 14.3 8.1 Electricity N.A. 2.9 2.6 2.6 2.5 2.6 Construction 4.4 4.6 4.1 4.1 4.0 4.7 Transport 3.1 3.2 4.1 4.1 4.0 4.4 Com-erce 7.1 7.2 6.4 6.4 6.2 5.5 Nonmaterial services N.A. N.A. 9.1 9.i 10.4 11.6 National income (Z) 100.0 100.0 100.0 100.0 100.0 100.0 National income CY billion) 394.0 394.0 457.7 457.7 457.7 527.7 * Includes metallurgy, coal products, petroleum refining, chemicals, machin- ery (narrow), metal products and building materials. Values of extraction activities have been taken out and put in "mining." ** Includes wood products, food processing, textiles and clothing, paper and miscellaneous manufacturing. Logging and salt mining have been trans- ferred to "agriculture" and "mining" respectively. Note: See Table 2.2 for the definitions of headings la - /f. Source: SYC, 1983 and Appendix Tables C.1-C.5. -9- adjustment. As in the previous table, figures in column (a) come directly from the Statistical Yearbook while the rest are based on the input-output tabLes in Appendix C. Figures in columns (a) and (b) are again in MPS while those in columns Cc)-(O) are in SNA. The sectoral shares in (a) and (b) are basically the same except that, as a result of the transfer of brigade- and team-run nonagricultural enterprises from agriculture to other sectors, the share of agriculture in (b) dropped by 2.4 percentage points while that of industry went up by 1.9 percentage points. The remaining 0.5 percentage point is distributed among construction, transport and commerce. in which some brigade and team enterprises also operate. 2.14 In (c), as a result of conversion from MPS to SNA, the shares of all the material sectors dropped, except for transport which rose from 3.2% to 4.1% as passenger transport was added to it. The share of nonmaterial servi- ces was estimated at 9.1%. In (a) to (c), no detailed breakdown of industry is given for lack of data on mining. In (d), the estimated mining share is 5.0%. The share of industry is slightly lower than in (c), while that of agriculture is slightly higher, since we shifted logging from wood products to agriculture. In (e), after adjusting for concealed services in the material sectors, the share of nonmaterial services rose from 9.1% to 10.4%, while the shares of other sectors dropped slightly. In (f), after price adjustment, mining rose from 4.9% to 10.8% (reflecting the large increase in coal and oil prices). Heavy manufacturing and light manufacturing (whose definition is not quite the same as in Chinese statistics) fell from 19.0% to 16.4Z and from 14.3% to 8.1% respectively. The share of commerce also declined, despite an upward price adjustment, because of a larger increase in the cost of its inputs, while the share of nonmateriaL services rose further. Recent Changes 2.15 Since 1978, as shown in Table 2.4, China's economy has grown rapidly, and there have been significant changes in its structure. The share of investment in net material product declined from 36.1Z in 1978 to 30.4% in 1983. The decline in the share of investment in circulating capital (or stocks) was even more marked, from 10.1% to 6.4%. The share of consumption in NMP has correspondingly risen from 62.7% to 70.9%. The bulk of the increase was in household consumption expenditure, which rose from 55.6% to 62.9%. An increase in agricultural procurement prices and introduction of the production responsibility system, as well as rapid growth of rural nonagricultural activ- ities, have led to a large increase in the share of agriculture (including brigade and team industry), from 35.4% to 44.9% of NMP. These recent changes should be borne in mind in interpreting the international comparisons in the next section, which are based on 1981 data. Employment 2.16 There are two different sources of data on employment in China, the Statistical Yearbook and the 1982 Census (10% sample). Although in percentage terms their distributions by sector are similar, in absolute terms they are quite different. Much of the difference arises in agriculture and is attribu- table mostly to the wider definition of the agricultural labor force in the census. On account of its wider coverage and greater international compara- - 10 - Table 2.4: STRUCTURAL CHANGE, 1978-83 /a (X of national income) 1978 1983 Demand /b Investment 36.1 30.4 Fixed 26.0 24.0 Circulating 10.1 6.4 Consumption 62.7 70.9 Household 55.6 62.9 Public 7.1 8.0 Production Agriculture 35.4 44.9 Iadustry 46.8 41.9 Construction 4.1 5.0 Transport 3.9 3.5 Commerce 9.8 4.7 Real national income (index) 100.0 141.1 /a MPS basis. /b Shares of n.ational income, not (as in source) national income available. Source: SYC, 1984. - 11 - bility, especially in terms of sectoral classification, we worked mainly with the Census data, which we adjusted by removing what we estimated to be part- time agricultural workers among the lower-age groups and working-age women. We also switched some personnel engaged in nonmaterial services from the material sectors into (mainly) health and education and public administration and defense. (See Table B.1 and its accompanying text for the basis on which chis adjustment was made.) For further details about employment, see Appendix Tables D.l and D.2 and their accompanying text. Capital Stock 2.17 Fixed assets and circulating capital in each sector in 1981 were estimated on the basis of data from various sources, the main source being the Statistical Yearbook. Data on fixed assets were adjusted to a net (of depre- ciation) basis, but valued at original cost. Because the coefficients caLcu- lated for price adjustment of the input-output table (Appendix B) suggest that investment goods may be unusually low-priced in China, rough adjustments to the capital stock data were made for international comparison. For further details, see Appendix E text and accompanying Tables E.1 and E.2. 3. INTERNATIONAL COMPARISONS Sources of Comparative Data 3.01 Our comparative data come from various sources, including the World Development Report, 1983 and 1984, World Tables (Third Edition, 1983), UN Yearbook of National Accounts (1982), ILO Yearbook (1982), and publications from different countries, including official input-output tables. The first two pubLications are actually from the same source, i.e., the World Bank's data bank. In many of the tables below, we present this World Bank data in two alternative forms. One is simple weighted averages for all the countries in particular income ranges (e.g., lower-middle-income); these are the figures used in the World Development Report Indicators tables. The other is "predic- ted values" for a hypothetical large country (population of 60 million) at corresponding income levels. These predicted values were calculated from regression equations relating the variables i? question to income level, popu- lation size and other explanatory variables.4 (They refer to a country of a size that is, of course, small by comparison with China; but there are so few 41 The regressions from which the predicted values are derived were estima- ted from data that excluded both China and small countries (those with a population of less than 20 million in 1970). They are discussed in Moshe Syrquin, "Patterns of Development Since 1960: A Comparison for China" (unpublished World Bank paper, January 1985). This paper is in essence an updated version, using more recent data, of the regressions in an earlier book by Hollis Chenery and Moshe Syrquin, Patterns of Develop- ment, 1950-1970, (Oxford University Press, 1975). Further updating and extension of this work is being done in World Bank Research Project RPO 673-51. - 12 - really large countries that predicted values for them are subject to an unac- ceptably large margin of error.) 3.02 In spite of our efforts to increase the international comparability of the Chinese data, inconsistencies remain. For example, while in most coun- tries the electricity category also includes gas and water, in China it does not. Of course, these problems of sectoral classification are not unique to China. For instance, in one rndian publication, public administration and defense is included in other services along with such items as hotels, restau- -rants, canteens, 5arbers, sanitary services, wrapping and packaging of arti- cles, and so on.- For these and other reasons, the comparisons below are inevitably subject to a considerable margin of error. Composition of Demand Broad Aggregates 3.03 The composition of aggregate demand in China is very different from that of average low- and middle-income market economies but has some similari- ties to that of other centrally planned and East Asian economies. As Table 3.1 indicates, in 1981 China devoted 30.1% of national income to investment, a share that was far above the average for other low-income countries and greater even than the predicted value for large countries at upper-middle income levels.- All of this investment was financed, moreover, out of domestic savings, unlike most other developing countries. The share of public consumption in China is also unusually high, even by comparison with upper- middle-income countries. As a result, China's household consumption share, at 52% in 1981, is low compared with most other developing countries. 3.04 However, as Table 3.2 shows, compared with centrally pLanned economies of East Europe, such as Yugoslavia, Czechoslovakia and Poland, China's demand structure appears to be quite normal (although these countries are much richer than China). Household consumption share in these countries ranged from 50-53% while their investment share ranged from 28-37% of national income. With the exception of Poland, these countries also relied mainly on their own savings to finance their investment. High investment rates are also a feature of other rapidly growing East Asian economies (although South Korea's 26% investment rate in 1982 was no higher than the predicted value for its income group, it averaged nearly 29% in 1976-82). But many of these eco- nomies rely quite heavily on foreign capital inflow: Japan is the only large or medium-sized market economy in the world with a saving rate consistently as high as China's. 5/ Technical Notes on the Sixth Plan of India, 1980-85, Planning Commission of the Government of India, June 1981, p. 93. 6/ India also has an investment (and saving) rate far above the average for other low-income countries, though not quite so high as China's. The gap between China and other countries in this regard has not changed much since 1981, but was even larger in 1978 (see Tables 2.2 and 2.4). Table 3.1: INTERNATIONAL COMPARISON OF DEMAND COMPOSITION (AVERAGE PATTERN) (% of GDP) Predicted OLI LMI UMI values for large China India countries countries countries countries around 1980/81 1981 1982 1982 1982 1982 $300 $850 $2,500 Household consumption 52.0 67 86 70 67 76 70 65 Public consumption 17.1 11 11 13 15 10 11 12 Investment 30.1 25 13 23 24 20 24 26 Capital inflow -0.8 3 8 6 1 6 5 3 Saving 30.9 22 5 17 23 14 19 23 GNP per capita (US$) 350 260 250 840 2,490 (300)/a OLI - Other low-income countries (excluding China and India). LMI - Lower middle-income countries. UMI - Upper middle-income countries. /a Official World Bank estimate for 1981 is $300 (in 1981 dollars). Higher figure is based on price adjustments (see text). Sources: Appendix Table C.5; World Development Report, 1983 and 1984, Indicators Tables I and 5; regression results described in text. - 14 - Table 3.2: INTERNATIONAL COMPARISON OF DEMAND COMPOSITION (EAST ASIA AND EAST EUROPE) (Z of GDP) South China Korea Malaysia Japan Yugoslavia Czechoslovakia Poland (1981) (1982) (1982) (1982) (1982) (1978) (1978) Household consumption 52.0 63 54 59 51 50.1 52.7 Public consumption 17.1 13 21 10 16 21.4 12.8 Investment 30.1 26 34 30 34 28.4 37.3 Capital inflow -0.8 2 9 -1 1 -0.1 2.8 Saving 30.9 24 25 31 33 28.5 34.5 GNP per capita (US$) 350 1,910 1,860 10,080 2,800 4,700/b 3,700/b (300)/a /a See footnote to previous table. /b Subject to large margin of error. Sources: Appendix Table C.5; World Development Report 1984, Indicators Table 1 and 5; Jaroslav Krejci, National Income and Outlay in Czechoslovakia, Poland and Yugoslavia, (St. Martin's Press, New York, 1982), p. 23; World Bank Atlas, 1980. - 15 - Household Consumption 7/ 3.05 Although household consumption as a share of national income is quite low, China has a similar consumption pattern to those of other develop- ing countries at comparable levels of income. Table 3.3 compares China's household consumption structure with those of South and East Asian neighbors at low income levels. As the table indicates, food consumption as a share of total household consumption after price adjustment was very similar to those of the comparators, 61.4% in 1981. 3.06 Although China's food consumption as a share of total household con- sumption is no higher (and as a share of national income is probably lower) than in other low-income countries, daily caloric intake seems to be much higher. Table 3.4 presents estimates of food availability for China, India and averages for other low-income countries, lower-middle and upper-middle- income countries. China's food intake in kcal/day/person (1980-82 average of 2,548) is even higher than the average for lower-middle-income countries. A breakdown of total food intake reveals that one of the important contributing factors was that the Chinese diet consisted Largely of grain, which tends to cost less than other forms of food. The share of grain was about 84% of the total daily caloric intake, compared with 67% for India and 72% for other Low- income countries. China's consumption of animal products as a share of total food intake was about the same as most low-income countries (implying Lower consumption of crops other than grain). International Trade 3.07 China's volume of international trade has expanded greatly in recent years, and, relative to CDP, is now normal for a country of its size (Main Report, Chapter 6); for example, in 1981, the export ratio in China was higher than in India, and the import ratio not much lower (Table 3.5). China's trade ratios look small by comparison with the averages for other countries shown in the table, but even the "large" country in the table has a population of only 60 million. The same table shows that in 1981 China sold more goods abroad than it bought (there were even larger trade surpluses in 1982 and 1983 - see Main Report, Figure 6.4). This is unusual by the standards of developing countries, which tend to experience, in varying degrees, balance-of-payments deficits. India, for example, in 1982 had a trade deficit of about 3Z of CDP, and other low-income countries had an average deficit of 8% of CDP. 3.08 China's composition of exports and imports is also unusual when com- pared with that of other developing countries. Unlike most other low-income and lower-middle-income countries, Chinese exports consist mainly of manufac- tures, which accounted in 1981 for 53% of total exports, compared with aver- ages of 30% and 18% for other low-income and lower-middle-income countries. In fact, China's manufactured export share was at the same level as that of 7/ For some international comparisons of the composition of China's public consumption, see Annex A (education), Background Paper 4 (Section III), and China: The Health Sector (World Bank, 1984, Table 3.8). - 16 - Table 3.3: INTERNATIONAL COMPARISON OF HOUSEHOLD CONSUMPTION STRUCTURE /a (Z of total, at purchasers' prices) South China India Sri Lanka Thailand Korea Philippines (1981) (1980) (1980) (1960) (1955) (1955) Food 61.4 60.2 63.6 56.2 62.1 61.9 Clothing 11.6 10.9 6.1 8.1 10.2 7.6 Rent, fuel & power 7.8 6.7 5.2 9.6 13.3 11.5 Other 19.2 22.3 25.2 26.2 14.4 19.0 Total 100.0 100.0 100.0 100.0 100.0 100.0 GNP per capita 350 250 270 200 400 400 (US$) /b (300)/c /a Based on national accounts (rather than household survey) data. The fig- ures for China are from Appendix Table C.5, but converted to purchasers' prices. /b In 1981 dollars. Estimates for Thailand, Korea, Philippines are subject to a large margin of error. /c See footnote a to Table 3.1. Source: Appendix Table G.1. - 17 - Table 3.4: INTERNATIONAL CONPARISON OF FOOD AVAILABILITY OLI /a LMI /a UMI /a China India countries countries countries Food intake (kcal/day/ person) /b 2,548 1,906 2,082 2,454 2,816 Shares of total food intake (Z) /c Grain 84 67 72 66 57 Animal products 6 5 6 9 14 la OLI, LMI, L1MI defined in notes to Table 3.1. lb 1981, except China (1980-82 average). /c 1977, except China (1980-82 average). The OLI figures are unweighted averages of Bangladesh, Pakistan and Sri Lanka. The LMI figures are unweighted averages of Cuba, Egypt, Indonesia, the Philippines and Thailand. The UMI figures are unweighted averages of Brazil, Malaysia, Mexico, South Korea and Yugoslavia. The 1977 food intake averages for these country samples are close to the 1981 averages for their respective groups. Sources: Annex B (China: Agriculture to the Year 2000: Prospects and Options), Table A.7, and World Development Report 1984, Indicators Table 24. - 18 - Table 3.5: INTERNATIONAL COMPARISON OF FOREIGN TRADE Predicted OLI LMI UMI values for large China India countries countries countries countries around 1980/81 1981 1982/a 1982/a 1982/a 1982/a $300 $850 $2,500 Exports and Imports (Z of GDP) /b Exports 8.4 6 11 20 24 16.6 16.4 17.8 Imports 8.1 9 19 26 25 22.4 21.4 21.2 Capital inflow -0.3 3 8 6 1 5.8 5.0 3.4 Composition of Merchandise Exports (Z of Total) Primary 47 41 70 82 47 75 63 42 Fuels, minerals 24 8 16 43 29 31 26 16 Other primary 23 33 54 39 18 44 37 26 Manufactures 53 59 30 18 53 25 37 58 Textiles 2l 23 21 6 12 Machinery 5 8 1 2 14 Other 27 28 8 10 27 Composition of Merchandise Imports (Z of Total) Primary 36 62 43 40 40 67 65 63 Food 16 9 16 14 11 Fuels - 45 21 21 22 (17) (18) (19) Other 20 8 6 5 7 Manufactures 64 38 57 60 60 33 35 37 Machinery 27 13 26 29 29 Other 37 25 31 31 31 /a Data on composition of trade are for 1981 (1980 for India). OLI, LMI, UMI defined in notes to Table 3.1. /b Goods and nonfactor services. Sources: Appendix Table C.2; World DevelopSent Report 1984, Indicators Tables 5, 10, 11; regression results described in text. -19- upper-middle-income countries, despite its large fuel and mineral exports. One thing that China has in common with most low-income countries with respect to the composition of exports, however, is a high share of textiles (211). 3.09 Moreover, as regards nontextile manufactures, as well as textiles, China's exports are quite similar to those of India, which is also unusual among low-income councries in exporting more manufaccures than primary pro- ducts. The only major difference is that China exports a great deal more fuels and minerals than India, and less agricultural products. 3.10 In 1981. China's imports were 64% manufactures and 36Z primary products, which is quite similar to the averages of other developing coun- tries, although rather different from India and the predicted vaLues for large countries. In 1982, India's imports consisted of 62% primary products and 38% manufactures. The main reason for this difference is that, while China was a net exporter of fuel, in 1982 45% of India's imports consisted of oil and oil products. Production Structure 3.11 Table 3.6 presents international comparisons of China's production structure by broad sector expressed as percentages of CDP. Shares of CDP are rather sensitive to relative price variations among countries (and, in the case of China, to inaccuracies in the price adjustments discussed earLier), as well as to variatio7s in the treatment of indirect taxes and subsidies in national accounts.- It might therefore have been preferable to make the production structure comparisons in terms of gross output, but suitable data are rather scarce, especially for the nonmanufacturing sectors. 3.12 The most striking features of China's production structure, by comparison with other countries at its income level, are an unusuaLly high percentage from the manufacturing sector on the one hand, and an unusually low percentage from the service sector on the other. In terms of agricultural 8/ China's national accounts, like those of many developing countries, are compiled at "purchasers' prices" Ci.e. at prices which include indirect taxes less subsidies). Our input-output tables for China (Appendix C) are thus also at purchasers' prices, except that, in accordance with the accounting conventions for such tables, estimated transport and commerce margins are subtracted from the value of all the purchases of goods shown in the tables, and collected together in the transport and commerce rows. National accounts can also be compiled at "producers' prices"2 (i.e. at prices which exclude the effect of indirect taxes and subsi- dies). An attempt to convert China's GDP to producers' prices is made in Figure 9.1 of the .lain Report (based on Appendix J of this Annex); but it was not possible to calculate sectoral shares of GDP on this basis, partly because it is difficult in China at present to draw a meaningful line between indirect taxes and profits, or between subsidies and losses. - 20 - output share, China is a rather typical large low-income country. As the table indicates, in 1981, manufacturing accounted for 24.5% of China's CDP, as compared with 18.1% in India and the 13% predicted for large low-income coun- tries. Manufacturing shares tend to be lower in smaller countries, although this is obscured by the degree of aggregation in the table. But China's manufacturing share is equal to that predicted even for large upper-middle- income countries (it would be far bigger, 33.8%, but for the concealed service and price adjustments - Table 2.3). 3.13 On the other hand, the service sector in China is unusually small. At 17.2% of CDP in 1981, it was just over half that of India and differed by about the same degree from the average of other low-income countries, both actual and predicted (Table 3.6). The difference between China and other countries at higher income levels is of course even larger; and it would appear larger still had no adjustments been made for concealed services and price differences (without which the share of the service sectors in China's GDP would have been 15.5% rather than 17.22). 3.14 Table 3.6 Also shows that the overall share of the "infrastructure" sectors - construction, electricity, transport - in China's CDP, at 11.7% in 1981, is not very different from that of India (12.5%) or the predicted value for a large low-income country (ll%). This is somewhat surprising, since the close association between these sectors and both manufacturing and investment might have been expected to cause China's infrastructure share to be unusually high (the predicted value for large upper-middle-income countries is 15%). Moreover, China's economy is in fact unusually transport-intensive (in terms of ton-kilometers of freight per dollar of GDP - Table 3.12). Of the three infrastructure sectors, Tables 3.6 and 3.7 suggest that it is the shares of construction and transport in China's GDP that are unexpectedly small for a country with such a large manufacturing share; the electricity share is as large as in South Korea and Japan. The explanation is probably partly China's unusually low reliance on road transport (which contributes more per ton- kilometer to GDP than rail, because it is more labor-intensive and costly), and partly the apparently minimal amount of repair and maintenance construc- tion in China. 3.15 Table 3.7 shows production structures of different countries in more detail. China's mining share is very high by comparison with most of the other countries, but much smaller than that of Indonesia - another major energy producer. Of the 24.5% manufacturing share of GDP in China shown in the previous table, 16.4% was from heavy manufacturing while 8.1% was from light manufacturing. This light manufacturing share is very similar to that of India, though somewhat higher than that of Indonesia and appreciably lower than those of the richer countries in the table. By contrast, China's share of heavy manufacturing far exceeds that of India, Indonesia, and even Spain in 1972. It was in fact comparable to that of South Korea and Brazil, both in 1980, countries with income levels five times as high as China. Even more striking is the share of machinery, which, at 10.8% of CDP, surpassed that of South Korea and Brazil, and is about the same level as Japan in 1965. (China's unusually high investment rate and degree of self-sufficiency in machinery are consistent with the high estimated share of the machinery sector in CDP; but it should be noted that the price adjustments raised this share by - 21 - Table 3.6: INTERNATIONAL COMPARISON OF PRODUCTION STRUCTURE (BROAD SECTORS) - (Z of GDP) Predicted OLI /b LMI /b UHI /b values for large China India/a countries countries countries countries around 1980/81 1981 1979/80 1982 1982 1982 $300 $850 $2,500 Agriculture 35.8 35.1 44 23 11 35 24 13 Mining 10.8 1.5 } 6 6 5 Manufacturing 24.5 18.1 16 35 41 13 19 25 Construction 4.7 5.1 } 1 5 6 7 Electricity /c 2.6 1.7 7 8 Transport 4.4 5.7 1 40 42 48 6 Services 17.2 32.8 1 35 38 42 Total 100.0 100.0 100 ioo 100 100 100 100 /a Excluding indirect taxes. /b OLI, LMI, UMI defined in notes to Table 3.1. /b Includes gas and water for countries other than China (where these activities are in manufacturing). Sources: Appendix Table C.5; World Development Report 1984, Indicators Table 3; Technical Notes on the Sixth Plan of India, 1980-85, Planning Commission, the Government of India, June 1981; regression results described in text. - 22 - Table 3.7: INTERNATIONAL COMPARISON OF PRODUCTION STRUCTURE (DETAILED SECTORS) (X of GDP) South China India /a Indonesia Korea Japan Brazil Spain (1981) (19791-0) (1980) (1980) (1965) (1980) (1972) Agriculture 35.8 35.1 24.6 14.7 9.2 13.0 10.4 Mining 10.8 1.5 25.7 1.4 1.1 0.5 1.4 Heavy Nanufacturing 16.4 9.6 4.5 15.9 20.4 17.0 11.8 Metallurgy 1.7 2.2 0.5 1.7 2.5 3.7 2.4 Chemicals /b 2.2 3.2 1.3 6.7 4.9 6.7 3.4 Machinery T 10.8 3.1 2.2 6.1 11.7 5.5 4.1 Building materials Id 1.7 1.1 0.5 1.4 1.3 1.1 1.9 Light Masufacturing 8.1 8.5 5.9 13.4 11.2 9.6 14.1 Food processing /e 2.0 1.8 3.6 6.2 4.3 4.1 4.3 Textiles and clothing 3.6 3.4 1.2 4.9 2.6 2.8 5.6 Wood, paper. misc. 2.5 3.3 1.1 2.3 4.3 2.7 4.2 Infrastructure 11.7 12.5 10.4 18.2 17.5 12.0 15.7 Construction 4.7 5.1 5.3 8.3 7.3 5.8 7.5 electricity /f 2.6 1.7 0.5 2.3 2.6 1.1 2.2 Transport La 4.4 5.7 4.6 7.6 7.6 5.1 6.0 Services 17.2 32.8 26.7 36.4 40.4 47.9 46.6 Commerce 5.5/i 15.5 11.9 12.2 13.1 16.1LI 16.9I Misc. services /k 2.0 3.0 3.7 9.6 11.7 th /h Education and health 4.3 1.9 2.7 5.4 6.8 7hW 7Th Public ada. and def. 3.1 9.111 5.1 4.6 3.8 7.5 7.1 Housiug 2.3 3.3 3.3 4.6 5.0 th /h Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 /a Excludes indirect taxes. 7TW Includes petroleum and coal products. 7W Includes all fabricated metal products. 7iT includes other nonmetallic mineral products for countries other than China. We Includes beverages and tobacco. 7T Includes gas and water for countries other than China (where these activities are in manufacturing). IR Includes communications. -7h Data for these sectors not available individually, but included in services total. 7? Also includes restaurants. 7 Also includes restaurants and hotels. 711c Includes banking and insurance. 7: Also includes hotels, restaurants. canteens, barbers, sanitary services, wrapping and packaging of articles, repair of wooden furniture. Sources: China: Appendix Table C.5; India: Technical Notes on the Sixth Plan of India, 1980-85, Planning Commission, the Government of India, June 1981; Indonesia: Input-Output Tables, Indonesia (1980), Volume I, Biro Pusat Statisk, 1984; South Korea: 1980 Input-Output Tables of Korea, the Bank of Korea, 1983; Japan: IInterindustry Relations Table (1965),"Economic Statistics Annual (1970), the Bank of Japan, 1971; Brazil: Composite estimates based on: UN Yearbook of National Accounts Statistics, (1981) Annual Statistics of Brazil, 1982, and World Tables, 3rd Edition, the World Bank, Spain: Composite estimates based on: UN Yearbook of National Accounts Statistics, 1981, World Tables, 3rd Edition, the World Bank, The Contemporary Spanish Economy: An Historical Perspective (p. 235) by Smna Lieberman, George Allen and Unwin, London, 1982. - 23 - 2 percentage points, and that the underlying data on machinery prices are not very reliable.) 3.16 Table 3.7 also shows chat the smallness of the overall share of the service sectors in China's GDP is mainly due to the small share of commerce. In 1981, this was only 5.5%, compared with 15.5% in India, 11.9% in Indonesia, and 12.2% in South Korea. Although this finding is basically corroborated by the comparisons of employment discussed below (a similar pattern is also observed in the Soviet Union and Eastern Europel.), the smallness of the share of commerce in China's GDP may be due in part to large implip't subsidies, especially on staple foods, reducing this sector's profits.-. Although the 9/ See The Service Sector in Soviet Economic Growth by Gur Ofer, Harvard University Press, Cambridge, Massachussetts, 1973. The proportion of the labor force in services in the Soviet Union in 1964 was less than 60% of what would be expected (on the basis of cross-country regression analy- sis) for a country at that income level. It was further established that this was not due in any significant degree to the concealment of services in the activities of other sectors. Breaking down the total among the various service sectors, the overall gap was accounted for Largely by the smaLlness of the commerce sector, though finance, business services, and personal and domestic services were also smaller chan in other countries. According to Ofer, the small share of commerce is due to the follow- ing factors. A low share of household consumption in national income (associated with high investment and government spending) and a higher share of self-produced food consumpcion (associated with an unusually high share of agricultural employment and low urbanization) reduces the need for retail trade services. In addition, turnover per worker in retail trade was unusually high, as a result of limited customer ser- vice. The reasons for the smallness of Soviet wholesale trade, though less thoroughly investigated, appeared to be the system of materials allocation and a smaller volume of interenterprise transactions. The smallness of the finance sector appeared to be a consequence of state ownership of the means of production. The limited scale of business ser- vices, like that of wholesale trade, was attributed to greater enterprise self-sufficiency. The smallness of personal services seemed in part to be explained by discrimination against "unproductive" activities. 10/ These implicit price subsidies were estimated to amount to over Y 30 bil- lion in 1981 (Appendix J, Worksheet D). On the other hand, commercial profits on commodities other than staple food in China may be unusually high; and the sector holds exceptionally large stocks of unsold goods (Appendix E), interest payments on which raise its share of GDP. Commer- cial profits, taxes and interest combined are, after price adjustment, 50% greater than wages and self-employment income in the sector, and nearly 7% of the value of the capital employed in the sector (Appendix Tables C.4, C.5 and E.2), ratios which do not seem particularly low, although international comparisons are not easy, partly because of the widely varying importance of self-employment in the sector. Nonetheless, the price adjustment applied - which raised the gross value of commercial margins by Y 5 billion - may have been insufficient. - 24 - data on other service subsectors in Table 3.7 are subject to problems of inconsistent classification and measurement, they suggest that the shares of public administration and defense, miscellaneous services, and housing in China's GDP are all also unusually small (even after some adjustment for unusually low wages and unusually large housing subsidies - see Appendix B). By contrast, China's share of education and health services in GDP appears unusualLy large for a low-income country - 4.3%, as compared with 1.9% in India and 2.7% in Indonesia - although not as large as in much richer coun- tries such as South Korea and Japan. Determinants 3.17 China's unusual production structure (even after adjustment for unusual prices), by comparison with other low-income countries, is associated in part with China's unusual composition of demand. In particular, the high proportion of national income used for investment requires a high proportion of productive capacity to be used to produce investment goods, especially machinery, but also all the industrial intermediate goods needed for machinery production and for construction. This association is confirmed by calcula- tions presented in Appendix F, which assess the hypothetical impact on the pattern of gross output of replacing China's final demand vector with India's final demand vector (in which investment is a smaller share). The result would be increases in the production shares of agricuLture, light manufactur- ing, public utilities and transport, and commerce and services; and decreases in the productign shares of energy, machinery, other heavy manufactures, and construction.-# 3.18 However, the same calculations suggest that the unusual composition of (final) demand is only part of the explanation of China's unusual produc- tion structure. Differences in input-output coefficients - the level and pat- tern of intermediate flows - are of roughly equal importance in explaining why energy and machinery constitute such a large share of total production in China. These differences are also much more important in explaining why ser- vices constitute such a small share of production. (In agriculture and light manufacturing, by contrast, unusually high intermediate demand in China partly offsets unusually low final demand.) Similar calculations using Japan rather than India as the comparator - also presented in Appendix F - confirm that intermediate use of agricultural products, energy, and light manufactures is unusually high in China, while intermediate use of services is unusually low. But by comparison with Japan, China's intermediate use of machinery il/ Production in these calculations is measured by gross output, rather than (as in Tables 3.6 and 3.7) by shares of CDP (i.e. net output). An addi- tional link in the chain connecting sectoral shares of GDP with the comr position of final demand is thus sectoral net-gross output ratios (see Tables 3.13 and 3.14). It should also be noted that final demand includes foreign trade: hence the reduction in energy production caused by substituting India's final demand vector for China's largely reflects the fact that India is a substantial net importer of energy, while China is a substantial net exporter. - 25 - appears from these calculations to be quite normal, and intermediate use of other heavy manufactures to be low. (All these results should be treated with caution, given the likely inaccuracies of our estimated input-output table for China.) Employment 3.19 China's employment structure both resembles and differs from that of other low-income countries in the same ways as its production structure, although the differences are not so pronounced. Table 3.8 presents interna- tional comparisons of China's employment structure by broad sector. In 1982, agriculture accounted for 69.6% of China's total labor force, quite similar to that of India and not much different from the average and the predicted value for other low-income countries. However, China's broad industry 12 share of the labor force, at 18.0%, was substantially higher than India's 12.9%, the average of other low-income countries (11%), and the predicted value for large low-income countries (12%). Conversely, China's share of the Labor force in transport and services was relatively low. At 12.4%, it was substantiaLly lower than India's 16.5% (which was close to the average of other Low-income countries) and was far below the predicted value of 21X. 3.20 Table 3.9 presents a more detailed breakdown of China's employment structure compared with other countries at various income levels, including the USSR (1959). The employment share of heavy manufacturing in China, at 7.5Z, was far higher than in Indonesia, but quite similar to South Korea in 1980 and the USSR in 1959, largely because of high employment in machinery. In light manufacturing, however, with a share of 6.1%, China was similar to Indonesia, but far below all the other richer countries in the table. The share of employment in infrastructure, at 4.7%, was quite low compared with those of the richer countries, and also with Pakistan's 10.3%. This is attributable partly to China's low employment in construction (except by comparison with India), and partly to low employment in transport, which at 1.9Z of total employment is the lowest in the table, probably t3e ause of the small share of (more labor-intensive) road transport in China._ 3.21 Employment in services in China, at 10.5% of the total in 1982, is not as much below India (14.0%) as would have been expected from the produc- tion data in Table 3.7, but is less than half as large as in Pakistan (22.3%) and Indonesia (29.6%). As was the case in the production comparisons, the shortfall is concentrated in commerce, which in China employed 3.3% of the labor force, as compared with 5.8% in India (again a smaller gap than would have been expected from the production data), 11.1% in Pakistan and 13.3% in Indonesia. The employment data for other service subsectors are less com- 12/ Mining, manufacturing, electricity and construction. 13/ The Soviet Union also relies to an unusually small degree on road trans- port, yet its transport employment share is not much less than Japan's. This is because the Soviet economy is far more transport-intensive than the Japanese economy (Annex F, Chapter 1). - 26 - Table 3.8: INTERNATIONAL COMPARISON OF EMPLOYMENT STRUCTURE (BROAD SEClURS) (Z of total labor force) OLI /a LMI /a UMI /a Predicted values for large China India countries countries countries countries arolund 1980/81 1982 1981 1980 1980 1980 $300 $850 $2,500 Agriculture 69.6 70.6 73 56 30 67 51 31 Broad industry /b 18.0 12.9 11 16 28 12 20 29 Transport and services 12.4 16.5 16 28 42 21 29 40 /a OLI, LKI, UMI defined in notes to Table 3.1. Ia Mining, manufacturing, electricity, construction. Sources: Appendix D; World Development Report 1984, Indicators Table 21; Population Census of India, 1981 (5% sample); regression results described in text. - 27 - Table 3.9: INTERNATIONAL COHPARISON OF EMPLO014ENT STRUCTURE (DETAILED SECrORS) fa (Z of total labor force) South China India Pakistan Indonesia Korea Japan USSR 1982 1981 1981 1980 1980 1965 1959 Agriculture 69.6 70.6 52.7 54.8 32.0 25.6 46.1 Mining 1.6 0.5 0.1 0.7 1.1 1.3 1.7/b Heavy Manufacturing la 7.5 } 2.4 8.8 12.9 9.3/c Metallurgy 0.5 } 0.1 0.7 1.5 1.4 Chemicals 1.2 } 0.6 2.5 1.7 0.6 Machinery 4.3 } 0.8 4.7 8.5 5.5 Building materials 1.5 } 10.9 14.5 0.9 0.9 1.2 1.8 Light Manufacturing /a 6.1 7 6.1 12.9 11.0 11.1/c Food processing 1.0 } 3.4 2.9 2.3 2.5 Textiles and clothing 2.3 } 1.6 7.4 4.8 3.5 Wood, paper, misc. 2.8 1 1.1 2.6 3.9 5.1 Infrastructure /a 4.7 10.3 6.4 9.9 12.9 13.0 Construction 2.5 1.5 4.9 3.2 5.3 6.5 6.5 Electricity 0.3 /d 0.7 0.2 0.4 0.6 1.0 Transport 1.9 2.5 4.7 3.0 4.2 5.8 5.5 Services /a 10.5 14.0 22.3 29.6 35.3 36.4 18.8 CDmmerce 3.3/e 5.8 11.1/f 13.3 14.9 19.6 4.9/e Misc. services 0.7 /£/8 0.6 11.7 7.4 1.77h Education and health 3.8 /x 3.9 4.8 8.7/i Public adm. & def. 2.6 Ig /g 15.7 3.7 3.5 2.6 Housing 0.1 j 1 1.1 1.1 2.3LI la For sectoral definitions, see Table 3.7. /b Includes coal, peat, oil and gas. Also see /c. /c Hining and manufacturing composite of estimates by Ofer and Urata (see the source listing). /d Included in manufacturing. Te Also includes catering. 79 Also includes restaurants and hotels. g Data not available for these individual subsectors. Ih Finance, credit and insurance (0.3), unallocated services (0.7), personal services, culture and recreation. /i Education, science and art, health and welfare. /i Includes hotels. Sources: China: Population Census of China, 1982 (10% sample), adjusted for over- estimation of agricultural labor force (see Appendix Table D.1); India: Population Census of India, 1981 (5% sample); South Korea: 1980 Input-Output Tables of Korea (unabridged, in Korean), the Bank of Korea, 1983; Pakistan: Yearbook of Labor Statistics, ILO, 1982; Japan: Composite estimate based on: Kazushi Ohkawa and Henry Rosovsky, Japanese Economic Growth - Trend Acceleration in the Twentieth Century, Stanford University Press, Stanford, 1973, and Population Census of Japan, 1960. "Manufacturing" breakdown was based on the latter; Indonesia: Statistical Yearbook of Indonesia, 1982; USSR: Composite estimate based on: Gtr Ofer, The Service Sector in Soviet Economic Growth, Cambridge, Mass., 1973; and Shujiro Urata, "Economic Growth and Structural Change in the Soviet Economy, 1959-1972," discussion paper, Report No. DRD109, the World Bank, October 1984. "M1anufacturing" breakdown was based on the latter. --28 - plete, but suggest - like the production data - that public administration and defense empLoyment is on the small side in China, while education and health employment is as high as in much richer countries such as South Korea. (A similar set of differences in the level and composition of service sector employment exists in Table 3.9 between Japan and the USSR.) 3.22 Combining Table 3.6 (production structure) and Table 3.8 (employment structure), we produced Table 3.10, which presents international comparisons of net output (i.e. contribution to GDP) per worker in broad sectors, expressed as a percentage of the average of all sectors. As this table indi- cates, in agriculture, China's net output per worker, at 51% of the average, was in Line with other countries at a similar level of income. China's net output per worker in broad industry (237%) was, however, substantially above India's 205% and the predicted value of 213%. This is prI7ably due largely to the high ratio of heavy to light manufacturing in China.1 3.23 In transport and services, China's net output per worker ratio (174%) is somewhat below the predicted value for a llgge low-income country (188%), and even further below that of India (233Z).- _ This is probably partly due to the unusual composition of services in China, and particularly to the much greater weight of public services (education, health, public administration and defense), whose net output is almost entirely wages. In commerce and other services, by contrast, net output includes substantial pro- fits and interest, as well as wages. In addition, as mentioned earlier, the net output of commerce in China may be understated because of large subsidies. Capital Stock 3.24 Table 3.11 shows China's sectoral shares of fixed capital stock in comparison with other countries. Fixed capital stock represents the cumula- tive effect of investment and is thus in principle a good indicator of past investment priorities. However, it is difficult to assess the value of fixed assets in a consistent way. Moreover, data for other countries are scarce, with the result that some of the numbers in the table are net of depreciation, others gross; likewise some are at historic cost, others at replacement cost. These comparisons must therefore be regarded as subject to a particu- larly large margin of error, although what they reveal is broadly consistent with the production and employment comparisons discussed above. 3.25 The most striking feature of China's capital stock composition is the high share of heavy manufacturing. In 1981, this amounted to 24.1% of total fixed assets - higher than Japan (19.8% in 1965), the UK (15.3% in 1970) 14/ Capital per worker is generally greater in heavy manufacturing, and hence so are profits, interest and depreciation per worker (net output - or contribution to GDP - per worker is the sum of these items plus wages). 15/ As regards both broad industry and transport and services, the ratios for other low-income countries diverge even more widely from the Chinese ratios. - 29 - Table 3.10: INTERNATIONAL COMPARISON OF SECTORAL NET OUTPUT PER WORKER (X of average for all sectors) OLI LMI UMI Predicted values for large China India countries countries countries countries around 1980/81 1981 1979/80 1982 1982 1982 $300 $850 $2,500 Agriculture 51 50 60 41 37 52 47 42 Broad industry /a 237 205 145 219 146 213 163 133 Transport and services 174 233 250 150 114 188 150 121 -/a Mining, manufacturing, electricity, construction. Source: Output shares in Table 3.6 divided by employment shares in Table 3.8. -In the last three columns, the output data in Table 3.6 were adjusted for consistency with the sectoral classification in Table 3.8. (The share of transport in GDP was assumed to be 4.5%, 5.5X and 6.5% at income levels of $300, $850 and $2,500, respectively.) - 30 - Table 3.11: INTRNATIONAL COMPARISON 0F CAPITAL STOCK COMPOSITION (I) South China Indla Xorea JIMan UK USSR 1961 1970171 1976/79 1963 1973 1953 1965 1970 1970 1959 1972 Sectoral share. of fixed capital stock /a Agriculture 11.4 22.4 21.6 9.4 9.7 19.2 13.3 6.0 2.2 14.5 12.3 Mining 5.2/b 1.3 2.0 0.4 0.4 ) ) 0.4 1.4 4.4 3.5 Heavy manufacturing 24.1 )14.0 )16.7 2.9 9.2 )12.2 )19.8 )19 0 15.3 11.8 15.5 Light manufacturing 6.4 ) ) 5.0 8.4 ) ) ) 6.5 7.9 6.8 Constructlon 2.1 1.3 1.1 1.0 0.8 0.4 1.3 1.9 1.3 2.0 2.7 Electricity 5.0 6.2 8.5 - 2.5 7-5 )23.4 )24.8 6.6 9.8 3.4 4.6 Transport 12.6 14.9 13.9 9.5 19.0 ) ) 9.4 13.3 13.5 12.6 Cmmerce/misc. services 2.8 6.1 6.2 17.4 10.4 )16.7 )21.6 13.8/c 11;2 5.9 7.3 Education & health/publlc 9.4 10.3 11.2 13.4 5.9 ) ) 16.3 10.2 9.2 8.8 adainistration Dwellings 21.0 22.6 18.9 38.6 25.6 28.1 19.2 26.6 28.9 27.1 25.9 Share of circulating capital in total capital stock /b 32.7 27.9/d 7.0/e 19.9/f 16.6 11.5 12.6 29.5IB /i For sectoral definltions, see Table 3.7. Definition of fixed capital not uniform across countries (see text). lb Coal and petroleum extraction only. 7 Includes "private nonprofit bodies." Td Data for 1965/66. 7T Data for 1968. Tf Data for 1955. i Data for 1967. 4h Total capital stock is fixed capital (see note a) plus circulating capital. Sources: China - Appendix Table E.2 (price adjusted). India tDaa on fixed capital stock from: Working Group on Savings, Capital Formation and Savlng in India 1950/51 to 1979/80 (Reserve Dank of India. 1952), Tables VII. 1 and VII.2, pp. 114-5. The share of dwellings Is estimated to be about 90% of the value given for capital stock in "real estate, ownership of dwellings and business services," on the basis of data given in "Estimates of Tangible Wealth in India," Reserve Dank of India Bulletin, October 1972, pp. 1718-48. Data on Inventories fron same article, p. 1721. South Korea - Fixed capital stock data fron data base for ths Comparative Study of the Sources of Industrial Growth and Structural Change (World Dank Research Project, No. 671-32), which gives a breakdown of gross capital stock into 22 categories. On the basis of data given in Kee Chun Han, Estimates of Korean Capital and Inventory Coefficients in 1968 (Seoul: Yonsei University, 1970), the hbare of dwellings is estlaated to be 601 of the value of gross capital stock in the "other services" category, the share of education and health to be 11.9Z, and the share of pub- lic administration to be 8.9Z. Data on inventories from Kee Chun Han, Appendix H. Japan - Data on fixed capital stock in 1953 and 1965 from Kazushi Ohkawa and Henry Rosovaky, Japanese Economic Growth: Trend Acceleration in the Twentieth Century (Stanford University Press, 1973), Basic Statistical Table 16, pp. 314-315. "Riparian works" Is included in agricul- ture and "general government buildings" in services. Data on share of circulating capital In total capital stock in 1955 and 1965 from Raymond W. Goldsmith, "A Synthetic Estimate of the National Wealth of Japan, 1885-1970," Yale University Economic Growth Center Discussion Paper No. 143. April 20, 1972, Table 7; adjusted by removing consauer durables from totals. Data for 1970 from Economic Planning Agency, 1970 National Wealth Survey of Japan, Vol 1, S ary Report (Tokyo, 1975). adjusted by removing consoemr durables from totals. United Kingdom - Central Statistical Office, National Income and Expenditure, 1971. Table 65 (p. 75). "Other ludustries" (which includes textiles, hospitals, universities, private schools, agricultural buildings and vehicles) is roughly allocated as follows: 10X for textlles (llght manufacturing), 601 for hospitals, universities and private schools (education and health and public administration) ani 3,vJ for agricultural buildings and vehicles (agriculture). Data on inventories from Table A;. USSR - Shujiro Urata, "Economic Growth and Structural Change In the Sovlet Economy: 1959-72,* World Bank Development Research Department Discussion Paper (Report No. DRD 109). October 1984, Table 4 (p. 19), which does not include data on nonmaterial services such as education, health and public administration. Nonproductive fixed assets (including housing) comprised 402 of total fixed assets In 1965 and 38.3% in 1970 (Central StatleticAl Board of the USSR, The USSR in Fgree for 1982, Ibscow, 1983, p. 47); the shares for housing (67.72) and the various nonuter- 1-1 Be IE i (23.1Z for educatIon, health and public administratiLon and 9.21 for miscellaneous services) are approximted from data In Central Statistlcal Board under the oncil of Mulsters of the USSR, Soviet Union 50 Years: Statistical Returns (boscow, 1969, p. 43). The share of circulating assets Is from the same publication, p. 44. - 31 - and the USSR (15.5% in 1972). The share of light manufacturing was not unusual at 6.4%. At 11.4%, China's share of fixed capitaL in agriculture (where problems of definition and measurement are especialLy acute) was small compared to India's 21.6% in 1978/79 and Japan's 19.2% in 1953, but was quite similar to that of South Korea in both 1963 and 1973. China's shares of fixed capital in electricity and transport are lower than in India and in South Korea in 1973 (but higher than in South Korea in 1963). Among the service .sectors, the fixed capital stock shares of housing, and of education, health, public administration and defense, in China are quite similar to those of India, though the share of housing is significantly lower than in the other countries shown (21% rather than 25-30%). China's share of fixed capital in commerce and miscellaneous services is by far the lowest in the table. Efficiency Indicators 3.26 Chinese and foreign economists often comment on the relative inefficiency of China's economy. But international comparisons of economic efficiency are difficult in principle, and the necessary data are scarce and subject to many problems. In the following pages, an attempt is nonetheless made to compare China with other countries in respect of various efficiency indicators - starting with materials and intermediate input usage, and then turning to use of capital and other inputs. Consumption of Key Materials 3.27 Table 3.12 presents international comparisons of materials use. In (A), China's consumption per US$ GDP of energy, steel and freight transport appear high by international standards. In energy, consumption of 2.90 kg of coal equivalent per US$ of GDP in 1980 was considerably higher than India's 1.77, more than twice as much as South Korea's 1.12, and almost six times as much as Japan's 0.51. China's steel consumpLton of 127.30 metric tons per million US$ of CDP in 1981 was about 30% higher than India's, about 10% higher than South Korea's and twice as high as Japan's. Consumption of freight transport of 3.10 ton-kilometers per USS of GNP in 1980/81 was aLmost twice that of India, almost twice that of the US, more than twice that of Brazil, and more than seven times that of Japan. 3.28 These high levels of materials consumption per dollar of GDP in China are partly a reflection not of inefficiency, but of the unusual composi- tion of China's GDP discussed earLier, and in particular the unusually large share of industry.1 / Thus, in part (B) of the table, we look at (total national) consumption of the same items per US$ of broad industrial output. 16/ Undervaluation of China's GDP could also be part of the explanation. In part A of the table, the GDP denominator of the China numbers does not include the price adjustment discussed earlier in this annex; but this would reduce the numbers by only 13%. It is possible that a more accu- rate price adjustment would increase China's GDP by a much larger margin, but some alternative estimates also point in the other direction: see the paper by Taylor cited in footnote 3. 'rable 3.12: INTERNATIONAL COMPARISON OF MATERIALS USE South West China India Korea Brazil Japan France Germany US UK A. Consumption per US$ GDP Energy (kgCE/US$, 1980) /a 2.90 1.77 1.12 0.88 0.51 0.45 0.49 1.05 0.57 Steel (m ton/US$ mln, 1981) /b 127.30 98.40 113.80 57.10 63.00 30.90 43.70 44.80 30.00 Freight transport (1980/81) /c 3.10 1.67 0.47 1.40 0.41 - - 1.80 - B. Consumption Per US$ Broad Industrial Output Energy (MTCE/1980 US$ bln) /d 1.06 0.99 0.48 0.32 0.30 0.30 0.26 0.47 0.23 Steel (m ton/US$ min) /e 353 379 291 168 146 88 95 132 91 Freight transport (1980781) /f 6.74 6.43 1.22 4.12 1.00 - - 5.32 - C. Energy Consumption Per Unit Output of Specific Products Steel (gcal/ton crude steel) /g 9.10 11.0 - 5.7 4.5 5.7 5.2 6.2 6.4 Truck transport, 1980 /h 113 49/i 35 (1,000 kilocalorie/100 actual payload ton-km) /a Total primary energy consumption. Source: Annex C: Energy, Table 1.7. 7S Apparent consumption. Sources: Steel Statistical Yearbook 1984, International Iron and Steel Institute; GDP figures derived from World Development Report 1983. /c Ton-kilometers/US$ GNP; Source: Annex F. 7d Annex C, Table 1.8 (based on gross output). 7Te Sources: Steel Statistical Yearbook 1984 and World Development Report 1983 (based on net output). 7/ tkm/US$. Source: transport data as in Ic; output data (net) as in /e. 7i Annex C, Table B.19. /h Annex C, Table 1.10. 71? Simple average of different haulage distances. - 33 - The difference between China and other countries is reduced considerably, but in most cases remains substantial. For example, in energy, China's consump- tion rate in 1980 was comparable to that of India, although still high in comparison with other countries. It was more than twice as high as South Korea's and the US's, and almost four times that of Japan. China's steel con- sumption per US$ million of broad industrial output at 353 metric tons was slightly lower than India's 379, but higher than all the other countries: over twice as much as Japan's 146, almost four times as muchx as West Germany's 95, but only a fifth greater than South Korea's. China's freight transport consumption, relative to industrial output, is still the highest in the table, but India is not far behind. 3.29 Even these high levels of materials consumption relative to indus- trial output do not necessarily indicate inefficiency, since the comparisons ignore the differing exttnt of nonindustrial consumption among countries, as well as the differing composition of industry and geographical differences affecting average transport distance. There is, however, some more detailed evidence that inefficiency is indeed one of the causes of high materials use in China. For example, in part (C) of the table, we compare, in physical terms, energy consumption per unit output of specific products. In steel pro- duction, China's energy consumption of 9.10 gcal/ton of crude steel was signi- ficantly lower than India's 11.0, but higher than those of the other countries by margins ranging from about 45Z in the US to 200% in Japan. In truck trans- port, also in physical terms, China's consumption of energy was just a little more than twice as much as in France and about three times as much as in the US. Intermediate Input Use 3.30 Another approach to assessing efficiency in materials use is to look at overall consumption of intermediate inputs, rather than at specific commo- dities - although this has the drawback that overall consumption has to be measured in terms of value, rather than in physical units, and is thus more vulnerable to noncomparability of prices across countries. In comparing over- all intermediate use in different countries, it is again necessary to allow for differences in the composition of final demand, since net-to-gross outDut ratios vary widely across sectors. In addition, allowance should be made for differences in the level of development, since intermediate input use in agri- culture tends to increase as income Levels rise. 3.31 Appendix F contains the results of calculations comparing interme- diate use in China with that in India and Japan, allowing for differences in the composition of final demand. Specifically, the amounts of intermediate inputs that China would need to produce India's and Japan's final demand vec- tors are calculated, and compared with the amounts of intermediate inputs actually used in those countries. This suggests that, in aggregate, China would need 34% more intermediate inputs than India and 27% more than Japan. For agricultural inputs, the corresponding figures are 78% and 97%; for coal and petroleum, 222% and 325Z; for light manufactures, 198% and 52%; for machinery, 293Z and 31%; and for utilities and transport, 7% and 31%. By con- trast, intermediate use of services is much lower in China than in India and Japan; and China uses fewer heavy manufactured intermediate inputs than Japan (though more than India). - 34 - 3.32 These calculations need to be interpreted cautiously. This is partly because the estimated input-output table for China may be unreliable, partly because Japan is at a much higher level of development, partly because enterprises in China tend to be more self-sufficient than in other countries (which reduces measured intermediate input use), partly because some of the results may reflect not differences in efficiency but differences in product composition within sectors, and partly because the comparisons involve only two other countries. NonetheLess, when taken together with the earlier calcu- lations on consumption of key materials, the results quite strcngLy suggest that China is a relatively inefficient user of intermediate material inputs. 3.33 Direct comparisons across countries of sectoral ratios of net to gross output are another possible way of evaluating efficiency in the use of intermediate goods, which in principle could also show whether inefficiency is common to all sectors of China's economy or is concentrated in particular sec- tors. The disadvantage of this approach, however, is that sectoral net-gross output ratios are highly sensitive to relative prices, and in the case of China thus depend greatly on the accuracy of the price adjustment coeffi- cients. (For example, the price adjustments reduce the net-gross output ratio of China's textiles industry from 29% to 19% - Appendix Tables C.4 and C.5.) 3.34 The possibility that the results may be much influenced by reLative price differences among countries, as weLl as by differences in the degr!e of vertical integration of enterprises, must thus be borne in mind in considering Tables 3.13 and 3.14. Even at face value, these tables shed little light on either the extent or the location of inefficiency in China's use of interme- diates. The former table presents international comparisons of net-gross output ratios by broad sector. In agriculture, mining and infrastructure, China's net-gross output ratios do not seem unusually low. In services, how- ever, China's net-gross output ratio is the lowest in the table - perhaps partly because of their unusual composition. In manufacturing, China's net- gross output ratio is lower than that of India, Indonesia and Japan, but simi- lar to that of South Korea. (In aggregate, China's net-gross output ratio is well below those of India and Indonesia, but above that of South Korea after 1970.) 3.35 A breakdown of net-gross output ratios within the manufacturing sector for the same countries is shown in Table 3.14. On average in heavy manufacturing, the net-gross output ratio in China seems quite normal, although this conceals a low ratio in chemicals, which is offset by a high ratio in machinery. In light manufacturing, however, the net-gross output ratio is lower in China than in the other countries, though not much lower than in South Korea. This is true in all three of the light manufacturing subsectors, although there is considerable variation among the other coun- tries. Use of Capital 3.36 Inefficient use of intermediate inputs indirectly implies ineffi- cient use of capital, since investment is required to produce these inputs. - 35 - Table 3.13: INTERNATIONAL COMPARISON OF NET-GROSS OUTPUT RATIOS (BROAD SECTORS) China India South Korea Japan Indonesia 1981 1979/80 1970 1975 1980 1965 1970 1975 1980 Agriculture 76 75 74 76 70 65 63 63 76 Mining 75 72 75 69 69 65 66 66 89 Manufacturing 25 29 26 23 23 31 32 31 30 Infrastructure 39 42 49 42 45 50 50 44 42 Services 60 68 77 73 66 77 72 66 79 Total 46 53 50 43 40 48 47 47 63 Sources: As in Table 3.7. - 36 Table 3.14: INTERNATIONAL COMPARISON OF NET-GROSS OUTPUT RATIOS (MANUFACTURING SECTORS) (Z) China India South Korea Japan Indonesia 1981 1979/80 1970 1975 1980 1965 1970 1975 1980 Heavy Manufacturing 29 30 31 25 22 33 33 31 29 Metallurgy 20 29 18 13 13 17 21 19 29 Chemi cals 18 25 34 23 21 35 38 25 20 Machinery 40 35 31 30 28 39 37 38 33 Building materials 35 33 41 37 30 44 41 38 48 Light Manufacturing 20 28 23 22 23 29 31 30 31 Food processing 15 15 19 19 23 26 33 25 27 Textiles & clothing 19 29 27 24 23 25 27 30 34 Wood, paper, misc. 29 50 32 28 25 32 34 36 44 Total 25 29 26 23 23 31 32 31 30 Sources: As in Table 3.7. - 37 - It is also reLevant, however, to look at capital requirements per unit of out- put. Table 3.15 presents estimates of fixed capital stock per unit of net output in broad sectors for China and some other countries. These estimates are subject to the considerable reservations expressed earlier concerning data on capital stocks, as well as to inaccuracies in the output data. The estima- ted ratios also vary widely across countries, which makes it harder to assess China's relative standing. 3.37 In agriculture, mining and infrastructure, China's use of fixed capital per unit of output is the lowest in the table. In services, China's use of fixed capital also appears on the low side. In manufacturing, however, and especialLy in heavy manufacturing, China apparently uses much more fixed capital than South Korea in 1968, but less than India in 1978/79, and probably about the same as Japan in 1965. These comparisons thus do not provide clear- cut evidence for or against the common proposition - based on direct microeco- nomic observation - that Chinese industrial enterprises are inefficient users of fixed capital. 3.38 Comparative data on use of circulating capital are presented in Table 3.11 (stock estimates) and Appendix Table E.3 (flow estimates). Though there is quite wide variation among the other countries, and between the same countries in the two tables, China's ratio of circulating to total capital stock is the highest in both tables, and is far above thaF of most of the other countries, especially the nonsocialist countries.-7 This tends to corroborate other, fragmentary, evidence that China wastes circulating capital because enterprises (commercial as welL as industrial) hold unnecessarily large stocks of inputs and outputs. Total Factor Pr3duccivity Growth 3.39 Another indicator of efficiency is total factor productivity (TFP) growth, defined as the difference between the growth of total ou put and the weighted average growth of inputs (usually capital and labor). 10 Table 3.16 presents some international comparisons of TFP growth. In interpreting these, it must be borne in mind that TFP growth can be calculated in a variety of 17/ Most socialist countries follow the accounting convention of including unfinished fixed investment projects as part of circulating capital (in the SNA, these are included with fixed investment), which naturally increases their ratios of circulating to fixed capital. In the World Bank's first report on China (China: Socialist Economic Development, 1983, the Main Report, para. 3.39), it was asserted that use of this accounting convention partly explained the high share of circulating capital in China. Subsequently, several officials of the State Statisti- cal Bureau have stated that this is not the case, and that unfinished projects are counted as part of fixed investment in Chinese statistics. 18/ It is preferable also to include material inputs, and to measure output by gross output (rather than net output or value added), but the neces- sary data are not often available. - 38 - Table 3.15: INTERNATIONAL COMPARISON OF StCTORAL RATIOS OF FIXED CAPITAL TO NET OUTPUT /a South Typical large China India Korea Japan UK countries 1981 1978/79 1968 1965 1970 $300 $1,200 Agriculture 0.46 1.30 0.49 5.03 0.93 1.19 2.13 Mining 0.69 4.94 0.79 } 3.67 0.93 1.43 Heavy manufacturing 2.12 } 0.73 } 2.11 1 1.69 1.72 - 2.57 1 1 3.47 Light manufacturing 1.14 1 0.58 } } 1.52 1.52 Infrastructure 2.42 4.73 2.43 5.19 6.20 7.69 6.25 Services 2.79 3.20 3.33 3.52 5.22 1.75 1.69 Total 1.45 2.51 1.57 3.48 4.52 /a Defiuition of fixed capital not uniform across countries: see earlier discussion of capital stock comparisons. Sources: China: Estimates based on Appendix Tables C.5 and E.2. India: Capital Formation and Saving in India 1950/51 to 1979/80, p. 115, Report of the Working Group on Sav- ings, Reserve Bank of India, February 1982. South Korea: Estimates of Korean Capital and Inventory Coefficients in 1968 by Kee Chun Han, pp. 81-90, pp. 97-103, p. 107, Yonsei University, Seoul, Korea, 1970. Japan: Japanese Economic Growth, Trend Acceleration in the Twentieth Century by Kazushi Ohkawa and Henry Rosovsky, p. 281, Stanford University Press, Stanford, California, 1973; Tables 3.7 and 3.11. UK: National Income and Expenditure, 1971, Central Statis- tical Office, Tables 11 and 65 (values of fixed assets were inflated from 1963 to 1970 prices by a factor of 1.39), London, 1971. Typical Large Countries: Estimates based on the model of growth and structural change discussed in Chapter 9 (written by M. Syrquin) of Chenery, H.B., S. Robinson and M. Syrquin (eds.), with G. Feder, Y. Kubo, J. Lewis, J. de Melo and M. Nishimizu, Industrialization and Growth: A Comparative Analysis, forthcoming, 1986. Other results of this model are considered in Back- ground Paper 9 of the present report. The dollar figures for income level are (approximately) at 1981 prices. - 39 - Table 3.16: INTERNATIONAL COMPARISON OF TOTAL FACTOR ±RODUCTIVITY GROWTH TFP share TFP growth of output (Z p.a.) Rrowth (Z) (A) (B) (~~~~~A) (al) China /a 195;!M 0.5 -1.0 8 -17 1952-75 0.3 -1.1 5 -18 1975-81 1.0 -0.3 17 -5 Brazil lb 1950-W 3.7 54 1955-70 2.1 34 1960-74 1.6 22 Korea 1955-60 /c 2.0 47 1955-70 7W 5.0 57 1960-73 7H 4.1 42 Spain 1959-65 /e 5.0 44 Japan 1952-71 /f 3.8 38 1952-64 7*g 5.1 53 1953-71 7W 5.9 58 1955-71 7i 2.9 25 1955-70 7- 5.6 55 1960-73 7T 4.5 41 US /d I17Z-60 1.4 38 1960-73 1.3 30 USSR 1 195;F60 1.9 32 1960-70 1.5 29 1970-75 0.1 3 Average-for 19 developing countries /k 2.0 31 Average for TT industri- alized market economies /k 2.7 49 /a Appendix H. 7W Elias, V. (1978), "Sources of Economic Growth in Latin American Coun- tries," Review of Economics and Statistics, Vol. 60, pp. 363-370. /c Chen, E.K., (1977), "Factor Inputs, Total Factor Productivity and Economlc Growth: The Asian Case," The Developing Economies, vol. 15, pp. 121-43. /d Christensen, L., D. Cummings and D. jorgenson (1980), "Economic Growth, 1947-73: An International Comparison," in J. KCendrick and B. Vaccara, eds., New Developments in Productivity Measurement and Analysis, NBER, The University ot Chicago Press. /e Balassa, B. and Bertrand, T. (1970), "Growth Performance of Eastern Euro- pean Economies and Comparable Western European Countries," American Econo- mic Review, Papers and Proceedings (May): pp. 314-20. /f Jorgenson, Dale W. and Mitsuo Ezaki, "The Measurement of Macroeconomic Performance in Japan, 1951-68," in Kazushi Ohkawa and Yujiro Hagami (eds.), Economic Growth: The Japanese Experience Since the Mei1i Era, Vol. 1. No. 19 (Toicyo: The Japan Economic Research Center, 973) . /g Watanabe, Tsunehiko, "`Lzrovement of Labor Quality and Economic Growth: Japan's Postwar Experience," Economic Development and Cultural Change, 21 (1972), pp. 33-35. /h Denison, Edward F. and William K. Chung, How Japan's Economy Grew So Fast: The Sources of Postwar Expansion tWashington, D.C.: The Broo'ings Institution, 191 6). /f Mieko Nlshiaizu and Charles R. Hulten, "The Resources of Japanese Economic Growth: 1955-71," The Review of Economics and Statistics, Vol. LX, No. 3, August 1978. /J A. Bergson and H.S. Levine (eds.), The Soviet Economy: Towards the Year 2000 (London, 1983), Chapter 2. Ik =enery, H.B., S. Robinson and M. Syrquin (eds.), with G. Feder, Y. Kubo, J. Lewis, J. de Melo and K. Nishimizu, Industrialization and Growth: A Comparative Analysis, forthcoming, 1986, Chapter 2. - 40 - different ways, and that the results are quite sensitive to the precise methods and assumptions used, including the relative weights attached to capital and labor. (For example, in Table 3.16 the estimates for Japan in 1953-71 range from 2.9Z p.a. to 5.9% p.a.) In the case of China, moreover, only crude estimates of TFP growth can be made, partly because of data limitations, but also because it is particularly difficult in a nonmarket economy to select appropriate input weights (Table 3.16 presents a range of results under plausibLe alternative weighting assumptions). 3.40 Subject to these qualifications, Table 3.16 suggests that TFP growth in China has been exceptionally slow. Even on the most favorable weighting assumption, China's TFP growth in 1952-81 (0.5% p.a.) is not only the slowest in the table, but also contributed by far the smaLlest proportion of output growth (in both cases with the exception of the Soviet Union in 1970-75). China's apparently poor comparative performance could in principle be due to the absence of other Low-income countries from the table, since it is possible that in all low-income countries TFP growth is dragged down by surplus labor in agriculture.l91 But Table 7.1 of the Main Report shows that TFP growth in 1957-82 (though not in 1952-57) was stagnant or negative also in China's state-owned industry. 19/ The only available study of TFP growth in another low-income country, India, is restricted to manufacturing. Interestingly, it suggests that in 1959/60-1978!79, TFP declined slightly, which is comparable to China's experience. (The source is as in the last footnote of Table 3.16.) - 41 - Appendix A Page 1 of 6 DATA USED IN COMPILING INPUT-OUTPUT TABLES 1. Tables A.1 to A.7 present data and estimates used in constructing the basic input-output tables, Tables C.1 and C.2. The data came from various sources including Statistical Yearbook of China (SYC) 1981 and 1983, Yearbook of Chinese Agriculture 1980, Almanac of the Chinese Economy (1981), Chinese Statistical Abstract (1982) and the World Bank's sector and economic reports on China. 2. Tables A.1 and A.2 show how gross output and value added in the material sectors were derived. These two sets of numbers permit an estimation of intermediate input use in each sector. Table A.1 shows how the gross out- put values for agriculture and the various industries were adjusted, first into 1981 prices and then for brigade-run industrial enterprises. The final coLumn gives the gross output values that go into the input-output tables, Table C.1 and Table C.2. Table A.2 shows similar adjustments made to value added. 3. Estimates for nonnaterial services are presented in Tables A.3 to A.6. These include housing, passenger transport, miscellaneous services, and health and education. These estimates were derived from various sources, and are subject to varying margins of error. 4. Table A.7 summarizes the relationship between the MPS aggregates in Table C.1 and the SNA aggregates in Table C.2. This involves depreciation, nonmaterial services, and military investment. (MPS treats military invest- ment as fixed investment whereas in SNA this is counted as public consump- tion.) 5. Figures in the final demand vectors of the input-output table were derived as follows. Household consumption estimates by sector were made by bringing together and roughly reconciling three sets of data, namely, the househoLd surveys, retail sales, and aggregate consumption (all from the Sta- tistical Yearbook, 1981). Public consumption estimates by sector were based on the state budget, the World Bank's reports on health and education in China, and guesswork. Fixed and circulating capital investment were broken down by sector partly on the basis of data on capital construction in the Statistical Yearbook, partly on the basis of other fragmentary information. Foreign trade figures were based on China's Customs Statistics, Vol. 1, 1982. In all cases, attempts were made to separate out commerce and transport margins, in accordance with the usual practice in input-output tables. Table A.1: RECONCILIATION WITH OFFICIAL DATA - GROSS OUTPUT (Y billion) Statistical Yearbook 1980 1981 All adjusted (Plus) Brigade (Equals) Input-output prices/a prices/b to 1981 prices enterprise table (gross output) Agriculture NA. 246.00 246.00 -28.80/d 217.20 Industry 512.00 512.00 23.80 535.80 Metallurgy 45.67 45.16 0.53 45.69 Electricity 19.49 19.27 0.15 19.42 Coal 15.73 15.55 1.07 16.62 Petroleum 28.21 27.90 0.02 27.92 Chemicals 59.14 58.48 2.05 60.53 Machinery 108.00 106.79 6.25 113.05 Building materials 19.06 18.84 4.36 23.21 Wood 10.49 10.37 0.51 10.98 Food precessing 69.01 68.24 1.95 70.19 Textiles 106.18 105.00 4.27 109.27 Paper 19.12 18.92 1.02 19.93 Other mfg. 17.68 17.48 1.51 18.99 Construction NA 72.9 72.9 2.20 75.10 Transport/c NA 23.4 23.4 1.20 24.60 Commerce NA 50.5 50.5 1.60 52.10 /a SYC 1983, pp. 222-224. 7Fb Ibid, p. 13. 77 Freight transport only. Estimated gross output value of 6.5 billion yuan for passenger transport is given in Appendix Table A.4. /d SYC 1983, p. 150. (Inflated to 1981 prices.) The adjusted amount was distributed among different sectors on the basis of the information in 1980 Yearbook of Chinese Agriculture, p. 365. o I Table A,2: RECONCILIATION WITH OFFICIAL DATA - VALUE ADDED /a (in current Y billion) Statistical (Plus) Non-IAU (Plus) Brigade (Equals) Input- yearbook/b enterprises/c industrial enterprises output table Agriculture 165.8 -9.20 156.60 Industry/d 166.89 4.01 7.60 178.50 Metallurgy 13.37 0.32 0.17 13.86 Electricity 11.11 0.27 0.05 11.43 Coal 6.75 0.16 0.34 7.26 Petroleum 13.08 0.31 0.01 13.40 Chemicals 17.61 0.43 0.65 18.69 Machinery 34.94 0.84 2.00 37.78 Building materials 8.02 0.20 1.39 9.61 Wood 4.37 0.11 0.20 4.67 1 Food processing 17.01 0.41 0.62 18.04 4 Textiles 29.19 0.70 1.36 31.26 Paper 6.08 0.14 0.33 6.55 Other mEg. 5.36 0.13 0.48 5.97 Construction 17.50 0.70 18.20 Transport 12.00/e 0.40 12.40 Commerce 27.80 0.50 28.30 /a Not including depreciation. 7W SYC 1983, p. 22. 7Ec Estimated. (IAU = independent accounting unit.) 7W SYC 1983, pp. 238-239. 7e Freight transport only. Estimated value added of 3.0 billion yuan for passenger transport is given in Appendix Table A.4. o P -44- Appendix A Page 4 of 6 Table A.3: HOUSING ACCOUNTS Urban Urban owner- rented occupied Rural Total Housing Stock Area (bln sq m) 0.60 0.30 10.00 10.90 Value (Y bln) /a 75.00 15.00 115.00 205.00 Accounts (Y bln) Maintenance materials 0.41 0.20 1.24 1.85 Depreciation 1.42 0.30 1.78 3.50 Imputed net rent /b 3.75 0.75 5.75 10.25 Loss /c -4.95 _- -4.95 Wages 0.57 0.57 Gross output value /d 1.20 1.25 8.77 11.22 /a Original Cundepreciated) value: corresponding data in Appendix Table E.2 are net of depreciation. /b Five percent of value. 7c Difference between rent actually paid and economic rent (sum of mainte- nance materials, depreciation, imputed net rent and wages). /d Total of items above. Sources: Estimates based on various sources including SYC 1983, p. 323; China Daily 6/24/83; Almanac of China's Economy, 1981, p. 703; Chinese Statistical Abstract, 1982. Table A.4: PASSENGER TRANSPORT ESTIMATES (Y billion) Rail Highway Urban Other Total Fuel and power 0.25 0.39 0.31 0.25 1.20 Tires - 0.13 0.10 0.02 0.25 Other materials 0.62 0.42 0.31 0.10 1.45 Intermediate Inputs 0.87 0.94 0.72 0.37 2.90 Depreciation 0.30 0.08 0.11 0.11 0.60 Wages 0.37 0.40 0.36 0.12 1.25 Profits and taxes 1.00 0.49 0.12 0.14 1.75 Gross Output Value 2.54 1.91 1.31 0.74 6.50 Sources: Estimates based on various sources, including SYC 1983, pp. 302-305. Appendix A - 45 - Page 5 of 6 .Table A.5: MISCELLANEOUS SERVICES ESTIMATES (Y billion) Financial Other Total Intermediate inputs 0.60 1.20 1.80 Depreciation 0.10 0.10 0.20 Self-employment - 1.88 1.88 Wages 0.95 1.09 2.04 Profits and taxes 5.55 0.50 6.05 Gross Output Value 7.20 4.77 11.97 Sources: Estimates based on various sources, including SYC 1983, pp. 450-454. Table A.6: EDUCATION, HEALTH, ETC. ESTIMATES (Y billion) Budget Other Total Of which: wages Health 4.1 10.1 14.2 3.2 Education 10.3 5.0 15.3 6.7 Science, culture 2.8 6.4 9.1 2.0 Subtotal 17.1 21.5 38.6 11.9 Depreciation 0.8 Total 39.4 Sources: Estimates based on various sources, including China: Socialist Economic Development, (World Bank, 1983), Education Annex; and China: The Health Sector (World Bank, 1984). - 46 - Appendix A Page 6 of 6 Table A.7: STEPS IN CONVERSION FROM MPS TO SNA ACCOUNTS, 1981 (Y billion) Military Depre- Nonmaterial MPS investment ciation services SNA Household consumption 247.3 - -4.0 12.7 256.0 Public consumption 30.8 8.4 -1.9 32.7 70.0 Net exports 1.3 - - - 1.3 Stock investment 32.8 - - - 32.8 Fixed investment 77.8 -8.4 24.2 - 93.6 Residual error 4.0 - - - 4.0 National Income 394.0 0.0 18.3 45.4 457.7 - 47 _ Appendix B Page 1 of 6 DATA USED IN ADJUSTING INPUT-OUTPUT TABLES Concealed Services 1. Comparison of the 10 Sample Census data on employment by occupation in each industry with similar data from other countries suggests that in China an unusual number of nonmaterial service activities are concealed in the material sectors. These consist mainly of education, health and government services. Although the extent of this concealment is small, and although we are not entireLy clear how this is (or should be) handled in China's official statistics, we made some adjustments to both wages and employment neverthe- less. Table B.1 shows how these adjustments were made to the wage bill and gross output in the input-output table, Table C.3. We deducted a percentage share of the wage bill from each material sector and added it to those of non- material services sectors as specified in the table. Then we recalculated each gross output column sum, and made the corresponding change to the respec- tive row gross output sum. The difference between the original and the recal- culated row sums was then distributed between household consumption and public consumption in finaL demand as follows: 50-50% for health and education, 100l to public consumption for PAD, and 100% to household consumption for miscella- neous services. Price Adjustment 2. Prices in China are in some important respects different from those in most other developing countries, which has made most earlier international comparisons of China's income level and economic structure hard to inter- pret. In an attempt to overcome this problem, we used estimated price adjust- ment coefficients in each sector to modify our input-output table. In princi- ple, each coefficient should be the ratio (calculated at the official exchange rate) of the average price of gross output in the sector in question in a typical low-income country to its average price in China, suitably corrected for differences in commodity composition within the sector. Multiplication of the Chinese input-output table by these coefficients is thus supposed to reveal the size and structure of China's economy as it would be if prices in China were similar to those in a typical low-income country. 3. In practice, of course, there are many problems in doing this. An obvious one is the implicit and quite unrealistic assumption that the quanti- ties of the various goods produced and used in China would be the same even if their prices were different. There is also the difficulty of selecting a typical comparator country (since prices vary somewhat among low-income coun- tries). In addition, it is necessary to grapple with the distinctions among retail, wholesale, and ex-factory prices, and to consider how to treat indi- rect taxes and subsidies (see footnote 8 of this annex). But these conceptual problems are overshadowed by the sheer difficulty of securing data on the prices of a sufficiently large and representative sample of sufficiently com- parable commodities both in China and in comparator countries. - 48 - Appendix B Page 2 of 6 4. For China, we made use of price data from various sources, including SYC, Annex A of China: Socialist Economic Development (World Bank, 1983), Annexes B and C of the present report (on agricuLtural and energy prices), and World Bank project appraisal reports. Although these prices covered many items, they were in no sense a comprehensive or representative selection, and the precise specifications of the products to which the prices referred were often unknown. For other countries, we were in some cases able to obtain retail, wholesale, or ex-factory prices of similar items. But in many cases, it was necessary to compare Chinese prices with world market prices, either by calculating dollar unit values for China's exports and imports (from SYC), or by direct reference to sources such as Commodity Trade and Price Trends (World Bank, annual). These world prices were roughly adjusted for transport costs ana other factors such as tariffs and subsidies that commonly make domestic prices in other countries different from world market prices. 5. The resulting estimated price adjustment coefficients, whose magni- tude was in some cases influenced also by judgments about what would consti- tute a normal rate of profit on capital in a particular sector in other coun- tries, are shown in Tables B.2 and B.3. In many sectors no adjustment was made, either for Lack of data or because the available data were ambiguous as to the appropriate direction of adjustment. In some sectors such as agricul- ture, though, there was sufficient data to permit estimation of different coefficients for difEerent uses of the sector's output (usually corresponding to differences among the various commodities within the sector). Many of the coefficients are not very different from unity, but a few are much larger (e.g. coal) or smaller (e.g. machinery for household consumption - consumer durables). 6. All of the coefficients should be regarded as subject to a consider- able margin of error - especially since other studies comparing prices in China with prices in other countries have often arrived at somewhat different conclusions (see the paper by TayLor cited in footnote 3 of this Annex). Nonetheless, most of the more substantial adjustments have a reasonably sound basis, and are in accordance with common observation, such as the large increases in coal, crude oil and some refined oil product prices, the signifi- cant increases in power and transport tariffs and some agricultural product prices. The same is true of the substantial reduction in consumer durables prices, which are clearly exceptionally high in China. On the other hand, the reduction in the price of textiles, and the increases in the prices of metallurgical and metal products, producer machinery, building materials and construction, are all derived from very small samples of prices, and/or relate to commodities where variations in specification or quality can make a big difference. 7. Price adjustment in the service sectors posed substantial conceptual as well as data problems. In commerce, only a relatively small upward adjust- ment was made, despite the fact that this sector in China bears the burden of large implicit price subsidies (some of the reasons for not making a larger adjustment are discussed in footnote 10 of this annex). In education and health, and in public administration and defense, the price of gross output is an elusive concept. An upward adjustment was thus made to wages instead: it is intended to reflect the fact that professional and white-collar workers in China are paid much less, relative to manual workers, than in other countries. The adjustment in education and health wages is particularly large - 49 9 Appendix B Page 3 of 6 because of the extremely low pay of rural education (see Annex A of this report) and rural health personnel. In housing, the upward adjustment made was considerably less than the full amount that would be needed to eliminate all subsidies (see Table A.3), on the grounds that urban housing subsidies of various kinds are quite substantial in many other countries. 8. In applying the price adjustment coefficients, the standard proce- dure was to multiply the items in each row of the input-output table by the relevant sectoral coefficient or coefficients. The adjusted gross output of each seccor was then calculated as the sum of the adjusted row items; and the adjusted net output of each sector as the difference between its adjusted gross output and the sum of the adjusted intermediate inputs in the relevant column. In education and health, and in public administration and defense, the adjustment was made (as mentioned above) to wages, and adjusted gross out- put was derived from the sum of all the column items, with subsequent macching adjustment of final demand for these sectors. - 50 - Appendix B Page 4 of 6 Table B.1: ADJUSTMENT FOR CONCEALED SERVICES Percentage share of employment and wage bill in originating Originating sector Receiving sector sector Agriculture Education/health 0.3/b Agriculture Public admin. & defense 0.4/b Industry and transport /a Education/health 2.5 Industry and transport /a Public admin. & defense 2.0 Industry and transport /a Miscellaneous services 1.0 Construction Education/health 3.0 Construction Public admin. & defense 2.5 Commerce Education/health 0.6 Commerce Public admin. & defense 5.0 /a Mining, manufacturing, electricity and transport. /b Share of value added, not wage bill. Source: See text. Table B.2: COEFFICIENTS FOR PRICE ADJUSTMENT Household Public Fixed Stock All uses Intermediate uses consumption consumption inv, inv. Exports Imports Crops Animal hueb. 0.95; 1.15 1.10 1.10 1.10 1.30 1.00 Food 1.05; - Textiles 1.15; - Misc. mfg. 1.10 Animal husbandry 1.30 Metallurgy Manufacturing 1.10 Mining No adjustment Electricity 1.55 Coal Manufacturing 2.25 Mining 2.25 Petroleum Manufacturing - See Table B.3 1.24 1.85 - - 1.62 1.35 1 Mining 2.55 Chemicals in Manufacturing - Agric. 0.8; 1.00 1.00 - 1.00 0.86 0.91 Other 1.0 Mining No adjustment Machinery (narrow) - 1.4 0.50 1.40 1.40 1.40 0.84 1.0 Metal products 1.10 Building materials Manufacturing 1.15 Mining No adjustment Food processing No adjustment Salt mining No adjustment Textiles 0.9 0.90 0.90 - 0.90 0.80 0.90 Wood products No adjustment Logging No adjustment Paper, printing No adjustment Misc. manufacturing No adjustment Construction 1.20 Transport 1.28 Commerce 1.10 Miscellaneous services No adjustment X Education & health Wage bill. multiplied by 1.55; gross output value calculated as sum of revalued column. Row X items suitably increased. Public admin. & defense Wage bill multiplied by 1.35; gross output value calculated as sum of revalued column. Row 0 items suitably increased. * Housing Y 2.75 billion added to profits, gross output value and consumption. td - - 52 - - Appendix B - Page 6 of 6 Table B.3: PRICE ADJUSTMENT COEFFICIENTS FOR INTERMEDIATE USE OF REFINED OIL PRODUCTS /a Conversion factor Crops 1.0 Animal husbandry 1.0 Metallurgy 2.6 Electricity 3.6 Coaj 1.7 Oil Refining 3.6 Mining 1.3 Chemicals 1.6 Machinery 1.5 Building materials 2.5 Food processing 1.2 Textiles 2.1 Wood, paper, miscellaneous manufacturing 2.1 Construction 1.4 Transport 1.4 Commerce Miscellaneous services - Education and health 5.0 Public administration and defense - Housing /a Variation is according to estimated mix of different refined oil products used In particular sectors. Estimated adjustment coefficients were 5.0 for fuel oil, 1.0 for automotive fuel, 1.35 for other oil products. :~~~~~~ ~~~~ 53 -- Appendix C Page 1 of 10 DETAILED INPUT-OUTPUT TABLES 1. A set of five input-output tables was constructed based on 1981 data. Table C.1 and Table C.2 were prepared more or less simultaneously. The former accords with the Material Product System (MPS), the latter with the System of National Accounts (SNA). Apart from the basic differences (in treatment of depreciation, nonmaterial services, and military investment) between the two systems, these two tables are consistent in all major respects. In the MPS version, however, substantial discrepancies remain in the intermediate flow matrix; these were eliminated in the S7A version by making small adjustments to many of the intermediate flows.' In both cases, the intermediate flow matrix, particularly in the agricultural and energy sectors, draws heavily on research work done within the World Bank. We also referred to input-output tables of various other countries in estimating some intermediate flow elements. Tables C.3-C.5 incorporate the various adjust- ments discussed earlier. 1/ The discrepancies arise because the individual intermediate flow elements were in general estimated independently of the row and colu mn interme- diate use totals. Table C.2, 03t6A. 2992 IN9T-00TM0 TA NI 261w (3111R 662t0A3 139166 00111T 326Tl30 Awn AFP6OVIAT3 69010 Aart tbtl ci o We rote Chen Nse% Fol bo od TdIti Paper of. 006.2 Wass Gam of7~~~btua Il Airlgultara 32.40 - - 0.3$0 - 2.40 - - 21.11 30.10 12.30 2.60 2.10 2.30 - 2.V0 1.92 109.02 64.16 0."4 69.02 2.0 6.44 21.9,1 S."0 106.1? 2171.26 Ibtatlargy 0.30o 11.10 0.20 0.30 0.20 1.00 24.30 0.40 0.10 0.20 0.20 * 0.90 6.40 0.30 - -2.31 43.62 1.30 Ills 3.29 **06 41.69 Electrlicty 2.3so 2.46 2.16 .2.2 0.34m 3.33 1.41 0.13 0.23 0.44 0.99 0.62 0.12 0.17 0.06 2.06 - 21.92 2.22 0. 30 2.2 $1- - .01 2.30 19.62 00.2 0.19 1.90 2.61 2.06 0.02 2.32 0.30 2.33 C.09 0.40 0.43 0.29 0.21 0.23s 0.34 0.20 0.14 22.06 2.69 0.44 2.23 O . .09 - .34 26.62 ?attrmle 2.62 0.66 2.12 0.22 6.29 3.22 2.24 0.23 0.12 0.64 1.26 0.19 0.23 0. 39 2.49 0.02 0.16 23.23 0.02 0.23 0.13 - 0.00 3.63 0.02 4."9 21.92 Chemicals 14.30 0. 20 - 0.30 0.350 21.30 2.10 0.350 0. 30 2.00 2. 20 2.60 0.10 2.30o 0.20 2.01 -2.03 43.66 6.62 4.63 20.63 - 0.6 2.94M 4.34 14.63 Go.053 P10CM-91 3.00 3.30 0. 30 0.30 0.10 2.30 29.30m 0.10 0.30 0.60 2.00 0.30 0.40 9.30 2.00 4.350 -2.20 03.20 24.20 3.71 29.92 42.00 3.30 4.34 I.9 31.90 223."9 64ild1Im mAtmrela 0.342 0.230 0.02 0.20 0.20 0.20 0.30 2.00 0.20 0.20 0.03 - 0.20 29.30O - - -2.91 tII 0.61 0.46 2.23 - 0.20o 0.29 0.02 2.32 23.22 Vs d o. so 0.o0 o.n2 2.10 0.02 Olin 0. 30 o.ao I.40 0.02 0.30 .30o 0.40 2.3so - - -2.46 6.61 3.93 0.16 4.71 - 0.2o 0.3u 2.26 4.11 20.96 Food prm.a.2.ft 2.00 0.01 0.04 0.01 0.02 2.60 0. 20 0.02 0.03 4.20 0.40 0.03 0.10 - - 3.50 2.23 14.U GE 2.24 2.24 02S."6 0.45 2.63 2.26 $3.02 19.16 Textiles a elotlilag 0.46 0.03 0.04 0.03 0.20 0.30 0.40 0.20 0.20 0.20 30.00 0.4.0 0.40 0.30 0.20 2.10 11.44 61.26 30.94 2.01 32.03 * 4.30 0o.9 6.30s 42.02 2M9.2 Piper 0.20 0.20 o.oi 0.0a 0.oa 0.20 0.40 0.40 0.00 0.40 0.60 3.00 0.20 0.20 - 2.00 2.22 22.21 3.61 2.34 6.51 - .20 0.32 0.36 1.6 29.90 222k. oft. 0.30 0.20 0.03 0.20 0.20 0.30 0.10 0.20 0.20 0.20 2.091 0.20 2.O 2.30 - 0.20 -0.14 1.410 4.14 4.42 9.34 - .40 2.90 2.31 12.29 IL." Ciattgect2. 0.10 1.20 - 1.60 - 0.3 2 .00 0.60 - - - - 3.20 3.00 0,20 3. 90 25.60 0.29 0.21 0.30 39.00 - -- 34.30 70.20 irmmmp.rt 2.S0 1.30 0.40 0.20 0.30O 1.40 3.30 0.60 0.20 2.30 2.00 0.440 0.30 2.010 0.40 2.20 -0.23 11.63 2.12 0.12 2.63 2.00 0.60 2.46 1.26 M.S 26.60 coercm 1.10 2.22 0.23 0.20 0.12 2.32 2.10 0.49 0.22 2.91 2.86 0.49 0.90 2.02 0.30 2.00 0.11 lo.l? 26.3 2.16 21.99 2.00 0.63 2.42 2.46 32.31 32.20 viseroenu.r La -3.09 4.42 -0.93 -0.14 2.26 2.3 2.23 3.91 -0.23 -0.11 -0.33 -0.23 2.34 2.16 2.31 2.20 21.44 - 2311WM2A11 34.31 20.24 6.69 6.26 12.22 40.44 12.26 22.02 6.02 32.62 11.23 22.06 12.12 14.20 9.30 22.92 - 492.50 242.30 26.9 222.20 206.00 22.16 14.2 31.01 452.20 904.60 bepreklattou. 2.03 2.0 2.20 2.20 2."0 1.20 2.00 0.3SO 0.30 0.02 0.13 0.230 0.29 0."0 2.10 O." - 16.30 4.00 2.90 3.90 -24.20 -16.20 k WBIOM I~~.;$ 2.90 2.09 3.16 0.63 4.51 24.21 4.41 2.66 3.12 1.43 2.14 2.62 11.09 4.11 11.61 - 90.13 it*ote*6a - 0.20 0.03 0.01 0.09 0.26 2.04A 0.01 0.04 0.11 0. 30 0.0Y 0.03 - - 9.30 - 11.02 5uif-.uplo,m2t 244.33 - - - - 7.- O .0 - - - - 03 - 243.20 ViOetle at too..s 4.10 9.F. 1 0.31 2.61 2I.49 12:92 22.44 3S01 1.93 14.24 22.:42 6.24 3.29 ?'.II 53.62 6.62 - 246.0 2 VAL0M A0010 236.60 2sl63 it.43 1.26 21.40 26.69 21.17 9.62 4.62 26.04 22.26 6.33 3.97 26.30 22.40 26.30 - 214.00 CR006 04Tu'T 962.21 221.20 41.6 19.42 16.62 21.92 60.32 112.015 22.21 20.94 10.19 209.2 129.92 23.99 13.10( 24.60 32.20 - 90.4.0 261.30 30.60 216.20 62.00 22.16 23.29 31.03 244.00 /a Difference bet.... Crow of calum") sum of *mtImaetml 2nt.rue.st flt ows carId l.ipe.M..12, *mtlmmt.4 (row or slmn.) Intmrwdlaet mms. total.. In T.blm 0.2 (and samheueqot table.). thts, Ilmeropomela merv mllamlmtad by m.anll sd)..tmento to wayg of the Imtarmula2. rime. oqt 20 0l Table C.2: CHINA: 1981 INPUT-OUTPUT TABLE IN SNA (In current billion yuan) Elec- Petroleum Misc. Crops AH Metal tricity Coal Min Ref Chem Mach B/H 11ood Food Textl Paper mEg. Constr. Crops /a 10.67 20.00 - - 0.30 - - 3.50 0.01 1.50 2.50 27.65 12.70 2.60 2.20 3.50 Animal husbandry /a - 1.00 - - - - - 0.05 0.01 - - 13.04 0.80 - 0o10 - Hetallurgy 0.20 0.01 11,07 0,07 n,45 0.15 - 0.90 24.40 0.40 0.10 0.05 0.05 - 0.80 6.48 Electricity 1.41 0.34 2.81 2.87 1.22 0.35 0.17 3.36 1.40 0.71 0.14 0,44 1.02 0.43 0.65 0.17 Coal 0.68 0.16 2,00 2,89 1.10 0.01 - 1.38 0.52 1.66 0.10 0.43 0.49 0.22 0.30 0.16 Petroleum Mining - - 0,31 0,85 - 0.56 8.27 0,75 0.16 0.07 0.01 0.04 0.19 0.01 0.08 - Refining 2.74 0,65 0,56 0.72 0.12 0.18 0.20 2,43 0.82 0,16 0,09 0,39 0.74 0,13 0,22 0,45 Chemicals 14,50 0,01 0.30 0.01 0.25 0.40 0.10 15.93 2.60 0.50 0.25 2.80 2.10 1.50 0.60 2.40 Machinery 1.50 0,10 2.80 0.01 0,70 0.50 0.10 1.50 29.44 0.80 0,25 0.10 1.80 0.20 0.30 9,70 Building materials 0.15 0.05 0.10 0,01 0.05 0.10 0.01 0.20 0.30 1,51 0.10 0.05 0.05 - 0.10 19.45 Wood 0.10 0.05 0.25 0.01 0.60 0.01 0.01 0.05 0.40 0.40 1.38 0.01 0.20 1.30 0,25 2.50 Food processing 0.60 0.34 0,40 0.01 0.10 0.10 0.01 2.50 0.40 0.10 0.05 4.26 0.40 0.05 0.50 0.10 Textiles & clothing 0.40 0.10 2.05 0.01 0.80 0.80 0.04 1.7i 1.77 1.15 0.25 0.28 50.67 0.40 1.25 1.51 Paper 0.10 0.01 0.48 0.01 0.02 0.10 0.01 0.64 0.50 n.40 0.10 0.14 0.60 5.n7 0.40 0.45 Misc. mEg. n.10 0.05 0.40 0.01 0.20 0.10 0.01 0.45 0.65 0.20 0.07 0.01 1.00 0.20 2.75 1.40 Construction 0.50 - 1.80 - 1.60 - - 0.75 1,50 0.60 - - - - 0,10 4.00 Freight transport 0.75 0.05 2.37 0.09 0.30 0.30 0,08 1.45 3.45 0.90 0.33 0.82 2.00 0.40 0.70 1.98 Passenger transport 0.01 0.01 0.15 0.02 0.05 0.05 0.02 0.25 0.41 0.05 0.05 0.30 0.30 0.05 0.05 0.16 un Commerce 1.10 0.05 1.44 0.09 0.36 0.52 0.02 2.64 3.20 1.87 0.22 0.72 2.00 0.49 1.35 1.61 tn Hisc, services 0.04 0.02 0.25 0.01 0.04 0.03 0.01 0.20 0.34 0.04 0.02 0.10 0.12 0.03 0.03 0.08 Education & health - - - - - - - - - - - - - - - - Pub. admin. & defense - - - - - - - - - - - _ _ _ _ _ Housing - - - - - - - - INTEUMEDIATE 35.55 23.00 29.54 7.69 8.26 4.26 9.06 40.64 72.28 13.02 6.01 51.63 77.23 13.08 12.73 56.10 Depreciation 2.00 0.05 1.50 1.10 1.10 0.90 0.30 1.20 3.00 0.58 0.30 0.52 0.78 0.30 0.29 0.80 Wages 7.75 - 3.90 1.09 5.78 0.73 0.10 4.52 14.27 4.47 2.68 3.73 7.43 2.14 2.63 11.09 Interest - - 0.30 0.03 0.07 0.09 - 0.26 1.06 0.07 0.04 0.17 0.30 0.07 0.05 - Self-employment 126.00 18.55 - - - - - - - - - - 0.10 - - - Profits & taxes 4.30 - 10.45 9.51 1,41 6.92 5.56 13.91 22.44 5.07 1.95 14.14 23,43 4.34 3.29 7.11 Value added 138.05 18.55 14.65 10.63 7.26 7.74 5.66 18.69 37.77 9.61 4.67 18.04 31.26 6.55 5.97 18.20 GROSS OUTPUT VALUE 175.60 41.60 45.69 19.42 16.62 12.90 15.02 60.53 113.05 23.21 10.98 70.19 109.27 19.93 18.99 75.10 >' OQq m m W 0 O m Table C.2t (cont7d) Frt Pass Misc. Educ. & INTER- Consumption Investment Foreign trade FINAL GROSS trans trans Comm serv. health PAD House MEDIATE Household Covt Fixed Stocks Exports Imports DEMAND OUTPUT Crops - - 3.70 - 1.20 - - 92,03 66.66 0.86 3.00 16.36 2,19 5.50 83.57 175,60 Animal husbandry - - 2.00 - - - - 17.00 21.50 - - 2.30 0.80 - 24.60 41.60 Metallurgy 0.50 - - - - - - 45.63 0.00 - - 1.50 1,75 3.19 0.06 45.69 Electricity 0.09 0.02 0.47 0.20 0.30 - - 18.57 0.35 0.50 - - - - 0.85 19.42 Coal 0.59 0.09 0.21 0.07 0.36 - - 13.42 2.69 0.27 - - 0.33 0.09 3.20 16.62 Petroleum Mining - - - - - 11.30 0.02 - - 0.00 1.58 - 1.60 12.90 Refining 1.59 1.00 - - 0.02 - - 13.21 0.33 0.29 - - 1,21 0.02 1.81 15.02 Chemicals 0.15 0.60 1.90 0.10 7.26 - 0.10 54.36 5.97 1.00 - 0.80 2.96 4.56 6.17 60.53 1achinery 0.90 1.03 4.30 0.15 1.60 - 0.15 57.93 15.13 8.41 34.70 2.50 4.34 9.96 55.12 113.05 Building materials - - - - - - 0.40 22.63 0.00 0.20 - 0.20 0.19 0.01 0.58 23.21 Wood - - - - - - 0.25 7.77 3.31 0.50 - 0,20 0,38 1.18 3.21 10.98 Food processing 0.10 - 4.00 0.20 1.50 - - 15.72 52.00 0.64 - 0.45 2.65 1.28 54.47 70.19 Textile & clothing 0.20 - 1.70 0.30 3.40 - - 68.79 30.49 1.00 - 4.50 10.99 6.50 40.48 109.27 Paper 0.20 - 2.00 0.30 4.70 - - 16.23 2.24 0.61 - 1.10 0.33 0.58 3.70 19.93 Misc. afg. - - 0.20 - 3.45 - - 11.25 3.11 2.00 - 1.40 2.80 1.57 7.74 18.99 Construction 4.00 - 0.10 - 0.30 - 0.85 16.10 0.00 2.10 56,90 - - - 59.00 75.10 Freight transport 0.40 0.06 1.10 0.18 0.86 - - 18.57 2.82 0.12 1.00 0.80 2.46 1.16 6.04 24.60 Passenger transport 0.05 - 0.10 - - - - 2.08 2.42 2.00 - - - - 4.42 6.50 'n Commerce 0.67 0.10 1.04 0.20 1.47 - 0.10 21.26 25.94 0,27 2.00 0.65 3.44 1.46 30.84 52.10 CA Misc, servlces 0.06 - 0.10 0.10 0.35 - - 1.97 8.00 2.00 - - - - 10.00 11.97 Education & health - - - - - - - 0.00 1.80 37.64 - - - - 39.44 39.44 Pub. admin. & defense - - - - - - - 0.00 - 9.62 - - - - 9.62 9.62 Housing - - - - - - - 0.00 11.22 0.00 - - - - 11.22 11.22 INTERMEDIATE 9.50 2.90 22.92 1.80 26.77 0,00 1.85 525.82 256.00 70.03 97.60 32.76 38.39 37.05 457.73 983.55 Dspreciation 2.70 0.60 0.88 0.20 0.80 0.80 3.50 24.20 Wages 6.77 1.25 11.67 2.04 11.87 8.82 0.57 115.30 Interest - - 9.50 - - - - 12.01 Self-employment - - 0.50 1.88 - - - 147,03 Profits & taxes 5.63 1.75 6.63 6.05 - - 5.30 159,19 Value added 12.40 3.00 28.30 9.97 11.87 8.82 5.87 433.53 GROSS OUTPUT VALUE 24.60 6.50 52.10 11.97 39.44 9.62 11.22 983.55 La Agriculture was broken down into these two sectors for modeling purposes (Annex D). "Crops" includes forestry and sidelines (other than non- - t agricultural brigade enterprises); "animal husbandry" lncludes fishing. oq 10 M (D 10 0 f Table C.3, CHINAt 1981 INPUT-OUTPUT TABLE IN SNA (WITR MINING SUBSECTORS-SEPARATE0) (in current billion yuan) Metallurgy Coal Petroleum ChemLcala Metal Bldg nats Wood food proc mine Agrie Mfg Kin Elec Mfg Kin Kfg Mi n f Kin Mach prod Hi i ro o f Wn Txi ae E Agricultura 31.67 - - - - 0.30 - - 3.55 - 0.02 - 1.30 - - 2.50 40.69 - 13.50 2.60 2.30 Metallurgy Manufacturing 0.21 5.30 0.00 0.07 - 0.45 - 0.15 0.90 - 20.45 3.95 0.4n - 0.10 - 0.05 - 0.05 - 0.10 Mining 0.00 5.77 0.00 - - - - - - - - - - - - - - - - - - Electricity 1.75 2.35 0.46 2.87 0.07 1.15 0.17 0.35 3.33 0.03 1.12 0.28 n.67 0.04 0.09 0.05 0.40 0.04 1.02 0.43 0.65 Coal Manufacturing 0.00 0.70 0.00 - - - - - 0.20 - 0.10 - - - - - - - - - - Minings 0.84 1.30 0.00 2.89 0.51 0.59 - 0.01 1.18 - 0.31 0.11 1.66 - 0.10 - 0.43 - 0.49 0.22 0.30 Petroleim Manufacturing 3.39 0.56 - 0.72 - 0.12 0.20 0.18 2.41 0.02 0.65 0.17 0.1 0.02 0.09 - 0.30 O.0q 0.74 0.13 0.22 Mining 0.00 0.31 - 0.85 - - 8.27 0.56 0.75 - 0.16 - 0.07 - 0.01 - 0.04 - 0.19 0.01 0.08 Chinicals Manufacturing 14.51 0.30 - 0.01 - 0.25 0.10 0.40 15.27 0.13 2.04 0.56 0.50 - 0.25 - 2.80 - 2.10 1.50 0.60 Mining 0.00 0.00 - - - - - - 0.S3 - - - - - - - - - - - - Machinery (narro,) 1.24 1.64 0.52 0.01 0.03 0.51 0.08 0.39 1.15 0.01 18.50 4.18 0.52 0.08 0.08 0.08 0.08 - 1.39 0.15 0.23 Metal products 0.36 0.49 0.15 - 0.01 0.15 0.02 0.11 0.34 - 5.53 1.23 0.18 0.02 0.06 0.03 0.02 - 0.41 0.05 0.07 Bluilding materiast Manufacturing 0.20 0.10 - 0.01 - 0.05 0.01 0.10 0.15 0.05 0.24 0.06 0.51 - 0.10 - 0.05 - 0.05 - 0.10 1.1 mining - - - - - - - - - - - - 1.00 - - - - - - - Wood Products 0.15 0.15 0.10 0.01 - 0.22 0.01 0.01 - 0.05 0.32 0.08 0.35 0.05 - - 0.0 - 0.2n - 0.15 Logging - - - - - 0.38 - - - - - - - - 1.38 - - - - 1.30 0.10 Food processing Manufacturing 0.94 0.34 0.06 0.01 - 0.10 0.01 0.10 2.48 0.02 0.32 0.08 0.1n - 0.05 - 2.86 - 0.40 0.05 0.50 Mining - - - - - - - - - - - - - - - - 1.40 - - - - Textil.s & clothing 0.50 1.72 0.33 0.01 - 0.80 0.04 0.80 1.69 0.02 1.41 0.36 2.08 0.07 0.16 0.09 0.20 0.08 50.67 0.40 1.25 Paper 0.11 0.40 0.08 0.01 - 0.02 0.01 0.10 0.64 - o4 0.1 0.38 0.02 0.10 - 0.14 - 0.60 5.07 0.40 Miiscellancous nmfg. 0.15 0.34 0.06 0.01 - 0.20 0.01 0.10 0.45 - 0.52 0.13 0.20 - 0.0 - 0.01 - 1.00 0.20 2.75 Construction 0.50 1.50 0.30 - - 1.60 - - 0.75 - 1.20 0.10 0.57 0.03 - .1n Transport 0.82 2.42 0.10 0.11 - 0.35 0.10 0.35 1,70 - 3.08 0.78 0.90 0.05 0.34 0.04 1.12 - 2.30 0.45 0.75 Comkmerce 1.15 1.21 0.23 0.09 - 0.16 0.02 0.52 2.62 0.02 2.55 0.65 1.87 - 0.14 0.08 0.72 - 2.00 0.49 1.35 Misc. services 0.06 0.21 0.04 0.01 - 0.04 0.n1 0.03 0.20 - 0.27 0.07 0.04 - 0.02 - 0.20 0.12 0.03 0.03 F.ducatton & health - - - - - - - - - - - - - - - - - - - - Pub. adisin. & defense - - - - - - - - - - - - - - - - - - - - - Housing - - - - -- - - - - - - - - -- - - (Total mining) 0.84 7.38 - 3.74 0.51 - 0.27 - 2.46 - 0.47 0.11 2.73 - 0.11 - 1.87 - 0.68 0.23 0.38 INTERMEDIATE 58.55 27.11 2.43 7.69 0.62 7.64 9.06 4.26 40.29 0.35 59.19 13.09 12.64 0.38 3.14 2.87 51.42 0.21 77.23 13.08 12.73 ' Depreciation 2.05 1.17 0.33 1.10 0.03 1.07 0.30 0.90 1.19 0.01 2.40 0.60 0.54 0.04 0.07 0.23 0.47 0.05 0.18 0.30 0.29 0 Wages 7.75 2.77 1.13 1.09 0.31 5.47 0.10 0.73 4.49 0.03 11.47 2.80 3.66 0.81 2.11 0.57 3.62 n.11 7.43 2.14 2.63 I Interest - 0.23 0.07 0.03 - 0.07 - 0.09 0.26 0.86 0.20 0.07 - 0.02 0.02 0.17 - 0.30 0.07 0.05 F Self-euploYsent 144.55 - - - - - - - - - - - - - - - - - 0.10 - - Profits & taxes 4.30 8.16 2.29 9.51 0.04 1.37 5.56 6.92 13.77 0.14 16.22 6.22 4.98 0.09 1.55 .40 13.11 1.03 23.43 4.34 3.29 P GROSS OUTPUT vALUE 217.,20 39.44 6.25 19.42 1.00 15.62 15.02 12.90 60.00 0.53 90.14 22.91 21.89 '1.32 6.89 4.09 68.79 1.40 109.27 19.93 18.99 Table 0.3: (cont'd) Hisc. Sduc b (Total INTER- Contunption Investment Foreign trade FINAL GROSS Constr Trans Comm serv. health PAD Housing mining) KEDIATE Hou Iehold Govt Fied Stocks Exports Imports DEMAND OUTPUT Agriculture 3.50 - 5.70 - 1.20 - - 0.30 109.03 88.16 0.86 3.00 18.66 2.99 5.50 108.17 217.20 Metallurgy Manufacturing 6.48 0.50 - - - - - 0.60 39.86 - - - 1.33 1.20 2.95 0.42 39.44 Mining - - - - - 5.77 - - - 0.17 0.55 0.24 0.48 6.25 Electricity 0.17 0.11 0.47 0.20 0.30 - - 2.07 18.57 n.35 0.50 - - - - 0.83 19.42 Coal Manufacturing - - - - - - - 1.00 - - - - - - - 1.00 Mining 0.16 0.68 0.21 0.07 0.36 - - - 12.42 2.69 0.27 - - 0.33 0.09 3.20 15.62 Petroletn Hanufacturing 0.45 2.59 - - 0.02 - - 0.43 13.21 0.33 0.29 - - 1.21 0.02 1.81 15.02 Mning - - - - - - 11.30 0.02 - - - 1.58 - 1.60 12.90 Chemicals Manufacturing 2.40 0.75 1.90 0.10 7.26 - 0.l0 0.78 53.83 5.97 1.no - 0.80 2.96 4.56 6.17 60.00 Mining - - - - -- - - 0.53 - - - - - - - 0.53 Machinery (narrow) 7.56 1.49 3.32 0.12 1.23 - 0.12 1.51 44.71 7.41 6.01 34.70 1.86 2.83 7.88 45.43 90.14 Metal products 2.14 0.44 0.98 n.03 0.37 - 0.03 0.43 13.22 7.22 2.40 - 0.64 1.51 2.08 9.69 22.91 Building materials Manufacturing 19.13 - - - - - 0.40 0.20 21.31 - 0.20 - 0.20 0.19 0.01 0.58 21.89 Mining 0.32 - - - - - - 1.32 - - - - - - - 1.32 Wood Prodtuts 1.57 - - - - - 0.25 0.43 3.68 3.31 0.50 - 0.20 0.38 1.18 3.21 6.89 Logging 0.93 - - - - - - 0.38 4.09 - - - - - - - 4.09 Food processing Manufacturing 0.10 0.10 4.00 0.20 1.50 - - 0.28 14.32 52.00 0.65 - 0.45 2.65 1.28 54.47 68.79 Mining - - _ - - - - 1.40 - - - - - - - 1.40 Textiles & clothing 1.51 0.20 1.70 0.30 3.40 - - 2.10 68.79 30.99 1.00 - 4.50 10.99 6.50 40.48 109.27 Paper 0.45 0.20 2.00 0.30 4.70 - - 0.22 16.23 2.24 0.61 - 1.10 0.33 0.58 3.70 19.93 Hiscellaneous mfg. 1.40 - 0.20 - 3.45 - - 0.36 11.25 3.11 2.00 - 1.40 2.80 1.57 7.74 180.9 Constructlon 4.00 4.00 0.10 - 0.30 - 0.85 1.93 16.10 - 2.10 56.90 - - - 59.00 75.1n Transport 2.14 0.51 1.20 0.18 n.86 - - 0.85 20.65 5.24 2.12 1.00 0.80 2.46 1.16 10.45 31.10 Commerce 1.61 0.77 1.04 0.20 1.47 - 0.00 1.13 21.Z6 25.94 0.27 2.00 0.65 3.44 1.46 30.84 52.10 Misc. services 0.08 o,n6 0.18 0.10 0.35 - - 0.13 1.97 8.00 2.00 - - - - If.nn 11.97 EducatLon & health - - - - - - - - - 1.80 37.64 - - - - 19.44 39.44 Pub. adamn. 6 defense - - - - - - - - - - 9.62 - - - - 9.62 9.62 Housing - - - - - - - - - 11.22 - - - - - 11.22 11.22 (Total mIning) 0.48 0.68 0.21 0.07 0.36 - - 1.16 32.74 2.77 0.27 - 0.17 2.46 0.33 - 38.02 INTERMEDIATE 56.10 12.40 22.92 1.80 26.77 - 1.85 15.27 525.82 256.00 70.03 97.60 32.76 38.40 37.06 457.73 983.55 Depreciation 0.80 3.30 o.88 0.20 0.80 0.80 3.50 2.40 24.20 Wages 11.09 8.02 11.67 2.04 11.87 8.82 0.57 8.28 115.3n Interest - - 9.50 - - - - 0.23 12.01 -d0 SeIf-employment - - 0.50 1.88 - - - - 14703s Profits & taxes 7.11 7.38 6.63 6.05 - - s.30 11.84 159.19 m m GROSS OUTPUT VAIUE 75.10 31.10 52.10 11.97 39.44 9.62 11.22 38.02 983.55 X 0 K Table C.4: CHINA. 1981 INPUIr-OUTPUT TABLE IN SNA (ADJUSTED FOR CONCEALED SERVICES) (In current billion yuan) Metallurgy Coal Petroletn Chemicals Netal BldS Mats Wood Food Proc Mtse Agric Hfg n Elee Hfg FUn HFg Kin Hfg Min Mach prod Hfg Min prod Mfg Kin Textl Paper mEg Agriculture 14.17 - - - - 0.68 - - 3.55 - o.02 - 1.50 - 1.38 40.69 - 13.50 3.9n 2.40 etaltlurgy Manufacturing 0.21 5.30 o0.o 0.07 - 0.45 - 0.15 0.90 - 20.45 3.95 0.40 - 0.10 0.05 - 0.0 - 0.80 Hining 0.00 5.77 0.00 - - - - - - - - - - - - - Electricity 1.80 2.35 0.46 2.87 0.07 1.15 0.17 0.35 3.33 0.03 1.12 0.28 0.67 0.04 nfn9 0.40 0.04 1.02 0.43 n.65 Coal Manufacturing 0.00 0.70 0.00 - - - - - 0.20 - 0.10 - - - - - - - - Mining 0.84 1.30 0.00 2.89 0.51 0.59 - 0.01 1.18 - 0.31 0.11 1.66 - 0.10 0.43 - 0.49 0.22 0.30 Petroleum Manufacturing 3.19 0.56 - 0.72 - 0.12 n.2n 0.18 2.41 n.02 0.65 0.17 n.14 o0n2 0.09 0.30 0.09 0.74 0.13 0.22 MLning 0.00 0.31 - 0.85 - - 8.27 0.56 0.75 - 0.16 - 0.07 - 0.01 0.04 - 0.19 0.01 0.08 Chemicals Manufacturing 14.51 0.30 - 0.01 - n.25 n.10 0.40 15.27 n.13 2.04 0.56 0.50 - 0.25 2.80 - 2.10 1.50 0.60 Mlntng 0.00 0.00 - - - - 0.53 -- - - - - - - - - - Machinery (narrow) 1.32 1.64 0.52 o.n0 n.03 0.51 o.n8 0.39 1.15 0.01 18.50 4.IR 0.52 o0.8 0.08 0.08 - 1.39 0.15 0.23 Metal products 0.39 0.49 0.15 - 0.01 0.15 0.02 0.11 0.34 - 5.53 1.23 0.18 0.02 0.06 0.02 0.41 0.05 0.07 Building materials Manufacturing 0.20 0.10 - 0.o0 - 0.05 0.01 0.10 0.15 0.05 0.24 0.06 0,51 - 0.10 0.05 - o0.s - 0.10 Mining - - - 1.00 - - - - - Wood products 0.15 0.15 0.10 o.nl - 0.22 0.01 0.01 - 0.05 0.32 0.08 0.35 .0n5 - 0.01 - 0.20 - 0.15 Food processing Manufacturing 0.94 0.34 0.06 o.nl - 0.10 n.01 0.10 2.48 0.02 0.32 0.08 0.10 - n.05 2.86 - 0.40 0.05 0.50 Mining - - - - - - - - - - - - - - - 1.40 - - - - Textites & clothing 0.59 1.72 0.33 0.n0 - 0.80 0.04 0.80 1.69 0.02 1.41 0.36 1.08 o.07 n.16 0.20 0.0s 50.67 0.40 1.25 Ln Paper 0.11 0.40 0.08 0.01 - 0.02 0.01 0.10 n.64 - 0.40 0.10 0.38 0.02 0.10 0.14 - 0.60 5.07 0.40 %0 Hticellaneous mfg. 0.15 0.34 0.06 0.01 - 0.2 0.01 0.10 0.45 - 0.52 0.13 0.20 - 0.n7 o.01 - 1.00 0.20 2.75 Construction 0.50 1.50 0.30 - - 1.60 - - 0.75 - 1.20 0.30 0.57 0.03 - - - - - 0.10 Transport 0.86 2.42 0.1n n.11 - 0.35 0.10 0.35 1.7n - 3.08 n.78 0.90 0.05 0.34 1.12 - 2.30 n045 0.75 Commerce 1.23 1.21 0.23 0.09 - 0.36 0.02 0.52 2.62 0.02 2.55 0.65 1.87 - 0.14 0.7j - 2.00 0.49 1.35 Misc, services 0.06 0.21 0.04 o.01 - 0.04 0.nl 0.03 0.20 - 0.27 0.07 0.04 - 0.02 0.10 - 0.12 o.n3 n.03 Education & health - - - - - - - - - - - - - - - - - - - Pub. adin. & defense - - - - - - - - - _ _ _ _ _ _ _ _ _ _ _ lousing - - - - - - - - - - - - _ _ _ _ _ _ _ (Total mining) 0.R4 7.18 - 3.74 0.51 - 8.27 - 2.46 - n.47 0.11 2.73 - 0.11 1.87 - 0.68 0.23 0.38 INTERMEDIATE 61.42 27.11 2.43 7.69 0.62 7.64 9.06 4.26 40.29 0.35 59.19 13.09 12.64 0.38 3.14 51.42 0.21 77.23 13.08 12.73 Depreciation 2.28 1.17 0.33 I.1o 0.03 1.07 n.30 o.9o 1.19 0.01 2.40 0.60 0.54 0.04 .n.7 0.47 0.n5 0.78 0.30 0.29 Wages 7.22 2.61 1.07 1.03 0.31 5.17 0.10 0.71 4.25 n.03 1.84 2.64 3.46 0.76 2.00 3.42 0.11 7.02 2.03 2.48 Interest 0.02 0.23 0.07 0.03 - 0.07 - 0.09 0.26 - n0.6 0.20 0.07 - 0.02 0.17 - 0.30 0.07 0.05 Self-employment 144.55 - - - - - - - - - - - - - - - 0.10 - - Profits & taxes 4.70 8.16 2.29 9.51 0.04 1.37 5.56 6.92 13.77 0.14 16.22 6.22 4.98 0.09 1.55 13.11 1.03 23.43 4.34 3.29 GROSS OUTPUT VALUE 220.19 39.28 6.19 19.36 1.00 15.32 15.02 12.88 59.76 n.53 89.51 22.75 21.69 1.27 6.78 68.59 1.4n 108.86 19.82 18.84 OQ I 0 0 Table C.4: (cont'd) Risc. Educ & (Total INTER- AnSupu4at Investment Foreiln trade FINAL GROSS Constr Trans Comm serv. health PAD Housing mining) HEDIATE OAe i : v Ffxed S -toc Exports Imports DEMAND OUTPUT Agricultur.a 4.43 - 5.70 - 1.20 - - 0.6s 113.12 87.06 0.86 3.00 18.66 2.99 5.50 107.07 220.19 Metallurgy Kanufacturing 6.48 0.50 - - 0.60 39.86 o.on - - 1.17 1.20 2.95 -0.58 39.28 Mining - - - - - - - - 5.77 0.00 - - 0.11 0.55 0.24 0.42 6.19 Electricity 0.17 0.11 0.47 0.20 0.30 - - 2.07 18.57 0.29 0.50 - - - - 0.79 19.36 Coal Mantifacturing - - - - - - - - 1.00 - - - - - - - 1.00 mining O.16 0.6R 0,21 0.07 0.36 - - - 12.42 2.39 0.27 - - 0.33 0.09 2.90 15.32 Petroleum Manufacturing 0.45 2.59 - - 0.02 - - 0.43 13.21 0.33 0.29 - - 1.21 0.02 1.81 15.02 Mining - - - - - - - - 11.30 - - - - 1.58 - 1.58 12.88 Chemicals Kanufacturing 2.40 0.75 1.90 0.10 7.26 - 0.10 0.78 53.83 5.73 1.00 - 0.80 2.96 4.56 5.93 59.76 Mining - - - - - - - 0.53 - - - - - - - 0.53 Machinery (narrow) 7.56 1.49 3.32 0.12 1.23 - 0.12 1.51 44.71 7.28 6.01 34.70 1.86 2.83 7.88 44.80 89.51 Patal products 2.14 0.44 0.98 0.03 o.37 - n.03 0.43 13.22 7.06 2.40 - 0.64 1.51 2.08 9.53 22.75 Building materials Manufacturing 19.13 - - - - - n.40 0.20 21.31 - 0.20 - - 0.19 0.01 n.38 21.69 Mining 0.32 - - - - - - - 1.32 - - - -0.05 - - -o.05 1.27 Wood products 1.57 - - - - - 0.25 0.43 3.68 3.2n 0.50 - n.20 0.38 1.18 3.10 6.78 Food processing Manufaicturing 0.10 n.20 4.no n.20 1.50 - - 0.28 14.12 51.80 0.65 - 0.45 2.65 1.28 54.27 68,59 Mining - - - _ _ _ _ _ 1.32 - - - - - - - 1.40 C' Textttes & clothing l.5I 0.2n 1.70 0.30 3.40 - - 2.10 68.79 30.08 1.00 - 4.50 10.99 6.50 40.07 108.86 0 Paper 0.45 0.20 2.00 0.30 4.70 - - 0.22 16.23 2.13 0.61 - 1.10 0.33 0.58 3.59 19.82 NLscellaneous mfg. 1.40 - 0.20 - 3.45 - - 0.36 11.25 2.96 2.00 - 1.40 2.80 1.57 7.59 18.84 1 Construction 4.00 4.00 0.10 - 0.30 - 0.85 1.93 16.10 - 1.49 56.90 - - - 58.39 74.49 Transport 2.14 0.51 1.20 0.18 0.86 - - 0.85 20.65 4.79 2.12 1.00 0.80 2.46 1.16 10.01 30.66 Commerce 1.61 0.77 1.04 0.20 1.47 - 0.00 1.13 21.26 25.29 0.27 2.00 0.65 3.44 1.46 30.19 51.45 miac, services 0.08 n.n6 0.18 0.10 0.35 - - 0.11 1.97 8.59 2.00 - - - - 10.59 12.56 Education & health - - - - 3.00 38.83 - - - - 41.83 41.83 Pub. admsin. & defense - - - - - - - - - - 12.30 - - - - 12.30 12.30 Housing - 1- 1.22 - - - - - 11.22 11.22 (Total mining) 0.48 0.88 0.21 o.07 0.36 - - 1.16 32.74 2.39 0.27 - 0.06 2.46 0.33 - 37.59 INTERMEDIATE 56.10 12.40 22.92 1.80 26.77 - 1.85 15.27 525.82 253.20 73.30 97.60 32.29 38.40 37.06 457.73 983.55 Depreclation 0.80 3.30 0.88 0.20 0.80 0.80 3.50 2.40 24.20 Wages 10.48 7.58 11.02 2.63 14.26 11.50 0.57 7.85 115.30 Interest - - 9.50 _ - - 0.23 12.nl Self-esployment - - 0.50 2.88 - - - - 147.n3 Profits & taxes 7.11 7.38 6.63 6.05 - - 5.30 11.84 159.19 GROSS OUTPUT VALUE 74.49 30.66 51.45 12.56 41.83 12.30 11.22 37.50 983.55 lb Io Table C.5: CHINA: 1983 INPUT-OUTPUT TABLE IN SNA (ADJIISTED FOR CONCEALED SERVICES AND PRICE DIFFERENCES) (In current billion yuan) Metallurgy Coal Petroleum Chemtcals Fetal Uldg aes Wood Food proc Hlec Agric Hfg Kin Elec Mfg Kin Mfg Min Hfg Hln Hach prod Mfg Hln prod Mfg Kin Textl Paper nfg Aariculture 33.47 - _ 0.68 - - 3.57 - 0.02 - 1.50 - 1.38 45.98 - 15.65 3.90 2.65 Matallurgy HAnufacturing n.23 5.83 - 0.08 - 0.5n - n.37 0.99 - 22.5n 4.35 0.44 - 0.11 n.06 - 0.06 - 0.88 Kining - 5.77 - - - - - - - - - - Electricity 2.79 3.64 0.71 4.45 0.11 1.78 0.26 0.54 5.16 0.05 1.74 0.43 1.04 0.06 0.14 0.62 0.06 3.58 0.67 1.01 Coal Hanufacturing - 1.58 - - - - - - 0.45 - 0.23 - - - - - - - - - Mining 1.89 2.93 - 6.50 1.15 1.33 - 0.02 2.66 - 0.70 0.25 3.74 - 0.23 0.97 - 1.10 0.50 0.68 Petroleum Hanufacturing 3.39 1.46 - 2.59 - n.20 0.72 n.23 1.86 0.03 0.98 0.26 0.35 0.05 0.19 0.36 0.11 1.55 0.27 0.46 mining - 0.79 - 2.17 - - 21.09 1.43 1.91 - 0.41 - 0.18 - 0.03 0.10 - 0.48 0.03 0.20 Chemicals Kanufacturing 11.61 0.30 - 0.01 - n.25 0.10 0.40 15.27 0.13 2.04 0.56 0.50 - 0.25 2.80 - 2.10 1.50 0.60 Hining - - - - - - - 0.53 - - - - - - - - - - Machinery (narrow) 1.84 2.29 0.72 n.01 0.n4 0.71 0.11 0.55 1.61 0.01 25.90 5.1R 0.73 0.11 0.11 0.11 ^ 1.95 0.21 n.32 Metal products 0.43 0.54 0.17 - 0.01 0.17 0.02 0.12 0.37 - 6.08 1.35 0.20 0.02 0.07 .0.02 - 0.45 0.06 0.08 Building materials Manufacturing 0.23 0.32 - n.n0 - 0.06 n.01 0.32 n.37 0.06 0.28 n.07 0.59 - 0.12 0.06 - 0.06 - 0.12 Mining _- 1.00 - - - - - - _ Wood products n.35 0.15 0.10 o.n0 - 0.22 0.01 0.n0 - .0.05 n.32 0.08 n.35 n.n5 - 0.01 - 0.20 - 0.15 Food processing Manufacturtng 0.94 0.34 0.06 0.01 - 0.1n n.nl n.1n 2.4R 0.02 n.32 0.08 0.3n - 0.05 2.86 - 0.40 0.05 0.50 Mining - - - 1.40 - - - - Ch Textiles & clothing 0.53 1.55 0.10 n.03 - 0.72 0.04 0.72 1.52 0.02 1.27 0.32 0.97 0.06 0.14 0.18 0.07 45.67 0.36 1.13 Paper n.31 0.40 n0n8 O.0l - 0.02 0.01 0.10 0.64 - 0.40 0.10 0.38 0.02 0.10 0.14 - 0.60 5.07 0.40 Miscellaneous rfg. 0.35 n.34 0.06 0.01 - 0.20 0.01 n.10 0.45 - 0.52 0.33 0.20 - 0.07 0.01 - 1.00 0.20 2.75 Construction 0.60 1.80 0.36 - - 1.92 - - 0.90 - 1.44 0.36 0.68 0.04 - - - - - 0.12 Traneport 3.3n 3.10 0.13 n0.4 - 0.45 0.13 0.45 2.18 - 3.94 1.00 1.15 0.06 0.44 1.43 - 2.94 0.58 0.96 Commerce 1.35 1.33 0.25 0.10 - 0.40 o.n2 n.57 2.88 0.02 2.81 0.72 2.06 - 0.15 0.79 - 2.20 0.54 1.49 Misc. services n.n6 n.21 0.04 0.01 - 0.n4 0.03 n.03 n.2n - 0.27 0.n7 0.04 - n.02 n.10 - n.12 n.o3 o.n3 Education 6 henith - - - - - - - - - - - - - - - - - - - - Pub. admin. & defense - - - - - - - - - - - - - - - - Housing - - - - - - - - - - - - - - - - - - (Total mining) 1.89 9.49 - 8.67 1.15 - 21.n9 - 5.10 - 1.11 0.25 4.92 - 0.26 2.47 - 1.538 0.53 0.88 INTERHEDIATF 60.87 34.47 2.98 16.12 1.31 9.75 22.55 5.66 47.80 0.39 72.17 15.31 16.20 0.47 3.60 58.00 0.24 78.11 13.97 14.53 Depreciation 2.2R 1.17 0.33 1.10 0.03 1.07 0.30 0.90 1.19 0.01 2.40 0.60 n.56 0.04 0.07 0.47 0.05 0.78 0.30 0.29 Value added 186.53 7.60 2.88 12.79 0.92 23.69 1.45 26.29 7.87 0.13 45.05 9.11 8.24 0.76 3.L1 10.12 1.11 18.05 5.55 4.02 CROSS nUTPUT VALUE 249.68 43.24 6.39 30.03 2.26 34.51 24.30 32.R5 56.86 0.53 119.62 25.02 24.98 1.27 6.78 68.59 1.40 96.94 19.R2 3R.84 .c 3. 0t OQ sim Table C.5: (cont'd) lse. Educ & (Total INTER- Cncuaptton Investment Fon trede FINAL CROSS Constr Trans Comm serv. health PAD Housing tminng) MEnOATS Houeo Covt Flied Stocks Eiportn Imparts DEHMAD OUTPUT Agriculture 4.43 - 8.30 - 1.20 - - 0.68 122.73 103.34 0.95 3.30 20.98 3.88 5.50 126.95 249.68 Metallurgy Manufacturing 7.13 0.55 - - - -- 0.67 43.66 - - - 1.29 1.32 3.25 -0.64 43.24 Kining - - - -- - 5.77 - - - 0.13 0.55 0.24 0.42 6.19 Electricity 0.26 0.17 0.73 0.31 0.47 - - 3.20 28.78 n.45 0.78 - - - - 1.23 30.01 Coal Manufacturing - - - - - - - - 2.26 - - - - - - - 2.26 Mining 0.36 1.53 0.47 0.16 0.81 - - - 27.98 5.38 0.61 - - 0.74 0.20 6.53 34.51 Petto lemu Manufacturing 0.63 3.63 - - 0.30 _ _ 0.62 21.42 n.41 0.54 - - 1.96 0.03 2.88 24.30 Mining - - - - - - - - 28.82 - - - - 4.03 - 4.03 32.85 Chmicela Manufacturing 2.40 0.75 1.90 0.10 7.26 - 0.30 0.78 50.93 5.73 3.00 - n0.0 2.55 4.15 5.93 56.86 Mining - - - - - - - 0.53 - - - - - - - 0.53 Machiniery (narrow) 301.56 2.09 4.65 0.17 3.72 - 0.37 2.30 61.89 3.64 8.43 48.58 2.60 2.38 7.88 57.73 119.62 Vital products 2.35 0.48 1.08 0.03 0.41 - 0.03 0.48 14.S4 7.77 2.64 - 0.70 1.66 2.29 10.48 25.02 Building materials CY Manufacturing 22.00 - - - - - 0.46 0.24 24.54 - 0.23 - - 0.22 0.01 0.44 24.98 Mlning 0.32 - - - - - - 1.32 - - - -0.05 - - -O.OS 1.27 Wood products 1.57 - - - - 0.25 0.43 3.68 3.20 .50 - 0.20 0.18 1.18 3.10 6.78 Food processaing Manufacturing 0.10 0.10 4.00 0.20 1.50 - - 0.28 14.32 51.60 0.65 - 0.45 2.65 1.28 54.27 68.59 Mining - - - - - - 1.40 - - 1.40 Textiles & clothing 3.36 0.36 1.53 0.27 3.06 - - 3.69 61.98 27.07 0.90 - 1L.05 8.79 5.85 34.96 96.94 rcper 0.45 0.20 2.00 0.3!) 4.70 - - 0.22 16.23 2.13 0.61 - 1.Iu 0.33 0.58 3.59 19.82 Miscellaneous mfg. 1.40 - 0.20 - 3.45 - - 0.36 11.25 2.96 2.00 - 1.40 2.M0 1.57 7.59 16.84 Conutructlon 4.80 4.80 0.32 - 0.36 - 1.02 2.32 39.32 - 3.79 66.26 - - - 70.07 89.39 Transport 2.74 0.65 1.54 0.23 1.10 - - 3.09 26.44 6.13 2.71 1.28 1.02 3.15 1.48 12.81 39.25 Cou_rce 1.77 0.85 1.14 0.22 1.62 - 0.13 1.24 23.39 27.82 0.30 2.20 n.72 3.76 1.61 33.21 56.60 Miisc, services. 0. 06 0.06 0.10 0.10 0.35 - - 0.33 3.97 8.57 2.00 - - - - 10.57 12.S4 Education 4 health - - - 3.66 47.35 - - - - 51.01 51.01 Pub. admin. & defence - - - - - _- 16.33 - - - - 16.33 36.33 Housing - - - - - - --- 14.26 - - - - - 14.26 14.26 (Total minIng) 0.68 1.53 0.47 0.16 0.81 - - 2.7t 65.82 5.33 0.61 - 0.33 5.32 0.44 10.93 76.75 INTIR.HEOIATE 64.73 16.04 27.76 2.09 28.11 - 2.14 19.49 615.37 274.12 90.30 123.64 35.37 41.17 37.10 527.70 1,143.07 00 DepreclatIon 0.80 3.30 0.88 0.20 0.80 0.80 3.50 2.40 24.20 . u Value added 23.86 19.91 27.96 10.25 22.10 15.53 8.62 54.86 503.5n elB CROSS OUTPUT VALUE a9.39 39.25 56.60 12.54 51.01 16.33 14.26 76.75 1,143.07 OiF' 0 o cl - 63 - Appendix D Page 1 of 3 SOURCES OF EMPLOYMENT DATA 1. Two sets of data are available on labor force and sectoral employ- ment, namely, the Statistical Yearbook and the Population Census 10% Sample (1982). Each has strengths and weakresses. The Statistical Yearbook uses sectoral definitions that correspond precisely with those in the production statistics, but for subseccors of industry provides data on employment only in state enterprises. In these subsectors, for urban collectives, commune indus- try, and brigade and team industry (included :l.FL agriculture in the Yearbook), the Statistical Yearbook has to be supplemented from a variety of other sources of varying reliability. The Census, on the other hand, uses some dif- ferent sectoral definitions (and hence some adjustments are needed to match the output data), but covers enterprises of all types - including brigade and team industry - in a consistent way. Although the Census uses a more normal lower age cutoff of 15 (16 in the Statistical Yearbook), its definition of the labor force is rather wide. According to the State StatisticaL Bureau, the definition of the labor force used in the Census is people 15 years and older, not "retired," who worked more than 16 days in June 1982. The Yearbook's definition is people 16 years and older, not retired (there are indicative upper-age limits), working 3 months in the year or more. Consequently, the Census appears to have picked up a lot of part-time workers, particularly in the agricultural sector. 2. In the sectoral employment data that we constructed from both sources, the differences were generally very small except in agriculture, in which the Census figure exceeded the adjusted Yearbook figure by about 80 mil- lion. This is about the same margin by which the Census total labor force exceeds the Yearbook total Labor force, implying that the 12-day-to-3-month part-timers are overwhelmingly concentrated in agriculture. To include all these people in either agricultural or total employment would reduce the international comparability of the Chinese data (it would make agriculture's share of employment 73Z as compared with 68% in the adjusted Yearbook data). We have therefore revised the agricultural and total labor force data downward by 60.2 million, which represents our estimate of part-time workers in agri- culture, primarily among the youngest and oldest age-groups, but also among working-age women. 3. Table D.1 shows how further adjustments were made to the Census data to make its sectoral classification more consistent with that of the SYC out- put data (especially so that these employment data could be used in the model discussed in Annex D). Table D.1 also shows the transfer of some workers from the material sectors into appropriate nonmaterial service sectors. Table D.2 compares the adjusted Census data with that of the Statistical Yearbook, unadjusted and adjusted. -64- 4eixD Table D.1: ADJUSTMIENT OF CENSUS ENFLOYNENT DATA Part-ti. Adjusted to Further adjusted 1952 census agricultural mid-1981 for concealed figures la workers excluded basis /b services Agriculture 384.3 324.1/c 316.25 314.87 metallurgy 3.1/d 3.00 2.85 Electricity 1.27e. 1.16 1.10 Coal 4.a7F 4.64 4.40 Petroleum 0.67 x 0.58 0.56 Oiemicals 5.67r 5.42 5.13 Nachlnery 19.7r 19.25 18.19 Bo£1tlng materils 8.aJ r 8.12 7.67 Wood 4.7T 3.97 2.96/v Food 4.67r 4.45 4.21 Textlles and clothing 10.775 10.35 9.78 Paper 5.475. 5.22 5.04 other manufacturing 3.475. 3.29 3.18 Construction 11.77p 11.12 10.81 Transport ,9.07j 8.82 8.60 Commerce 15.47MI 14.57 14.57 Other services 3.7T7s 3.20 3.84 Education, health, etc. 17.77F' 17.69 20.37 Public adamin. and defense 12. 7Tu 11.08 14.04 Total 525.8/v 465.6 452.16 452.16 /a Based on Table 34 of the 1OZ sample of the 1982 Population Census, matched to input- output table sectoral classification (reference in subsequent notes. *uch as "34.4.12,n in to specific lines of Table 34). /b Deflated by labor force growth rates between end-1981 and end-1982 by broad sectors based on SYC 1981, 1983. /c Adjusted for likely overestimation resulting fron the use of a wider definition of employment In census enumeration vis-a-vis statistical yearbook (see Appendix D text). /d Includes extracting and smelting. 7e5 LIne 34.3.1 of Population Census of China, 1982 (lOZ sample). 7r Includes 4.5 million in direct coal production. 0.3 -l lion in production of coal- derived products (the latter being imputed fron 34.4.12) and 0.1 million in production of town gas (34.4.2). !8 Includes 0.4 million in extraction and 0.2 million in production of pet-roleum or gas- based products. The latter (0.2 million) is the residual of the 0.5 million listed under manufacturing of petroleum and coal-based products, 34.4.12; the other 0.3 mil- lion goes to the coal sector in |f. /h Includes chemicals, rubber and pTa-stic products, and pharmceuticals. An the original figure of 6.6 million may have, auong other things included traditional herbal oedi- cines, alcohol and explosives, an estizated one million haa been transferred to "other manufacturing," in vhich those activitles are included in the output statlstles. /i Includes electronic and nonelectronic appliances and equipment, transport equipment, maeters, precision tools and metallic products. i Includes nonmetallic mining and nonometallic manufacturing. 0.5 million is taken off employment In production of glass, ceranic and enamel products to allow for their non- construction use (35.7.19). (The amount removed is then transferred to "other manu- facturing.") /k Includes logging, wood processing and making of furniture. 7r Includes manufacturing of food, beverages and tobacco. 75. Includes textiles, clothing, leatber and fur products. 7T. Includes paper pulp, paper making, paper products, printing, and educational, cultural and art articles. /o Includes other manufacturing, repairing and water supply and 0.5 million for glass, ceramic and enamel products, plus I milliou from the chemical sector. /p Includes civil engineering, road and pipe construction and installation, prospecting designs, preparations for construction and geological surveys. /q Includes transport, post and telecotinunications. 7A Includes commerce, food and beverage enterprise, distribution of goods and warehouse service. /a 34.15.1; management of housing, public facilities and residential services; banking and insurance. /t Includes educational, cultural and art manageent; management of sanitation, physical: education and velfare; acientific research and comprehensive technology services. /u Includes 4.24 million in milLtary and 8.0 million in national, Party and enterprise managemnt agencies and mass organizations. /v Includes 4.24 million in military. 7-. Losglng moved to agriculture. - 65 - Appendix D Page 3 of 3 Table D.2: COMPARISON OF CENSUS AND SYC EMPLOYMENT DATA (X of labor force) Statistical yearbook Census data mid-1982 of China, end-1981 (excluding part-timers) Unadjusted Adjusted Ta Agriculture 69.6 72.0 68.3 Industry /b 15.4 13.4 15.7 Construction /c 2.5 2.9 3.2 Transport 1.9 1.9 2.1 Commerce 3.3 4.0 3.6 Nonmaterial services 7.2 5.8 7.1 Labor force Z 100.0 100.0 100.0 Millions 465.6 432.8 437.0 /a With brigade industrial enterprises moved to "industry" and military per- sonnel added to "nonmaterial services." /b Mining, manufacturing, and electricity gas and water. /c Includes geological survey. Source: SYC 1981 and 1982 population census (10% sample). -|; - ~~~~~~~~~66- Appendix E Page 1 of 4 CAPITAL STOCK ESTIMATES Capital Stock Estimates 1. The estimated sectoraL capital stocks in Table E.1 are based on sev- eral sources. The main source was the SYC, particularly the tables on fixed and circulating capital of state enterprises (SYC 1983, pp. 12, 314), state capital stocks in industrial sectors (SYC 1983 pp. 293-296), the distribution of past capital construction by sector (SYC 1983, pp. 324-327), and commune and brigade enterprise capital (SYC 1983, pp. 206-207). In all cases the data on fixed capital were adjusted to a net (of depreciation) basis, but valued at original cost. For other components of the capital stock, including most agriculture and rural housing, only fragmentary information is available, and different assumptions and methods of indirect estimation yield somewhat dif- ferent results. (Rural housing is particularly uncertain, because of valua- tion problems: the housing estimate in Table E.1 could thus be wrong by as much as Y 40-50 billion.) 2. Because the coefficients calculated for price adjustment of the input-output tabLe (Appendix B) suggest that investment goods may be unusually low-priced in China, rough adjustments to the capital stock data were made for purposes of international comparison. The adjusted data are in Table E.2. The adjustment coefficient for fixed assets of about 1.28 was calculated on the basis of the coefficients for machinery used for investment and construc- tion (Appendix Table B.2), weighted by their respective shares in 1981 (Appen- dix Table C.4). The adjustment coefficient for circulating capital of 1.15 was estimated on the basis of the coefficients for all stockable commodities, weighted by their respective gross output shares in 1981 (Appendix Table C.4). The resulting estimates, which combine uncertainty about Chinese capi- tal stocks with uncertainty about the relationship between prices in China and elsewhere, should be regarded as subject to a substantial margin of error. - - 67 - Appendix E Page 2 of 4 Table E.1: ESTIMATED SECTORAL CAPITAL STOCKS, 1981 (Billion yuan) Net fixed Circulating assets capital Total Agriculture Crops 70.0 15.0 85.0 Animal husbandry 17.0 10.0 27.0 Metallurgy 44.3 16.2 60.5 Electricity 38.2 1.5 39.7 Coal 28.5 4.3 32.8 Petroleum Extraction 10.5 2.5 13.0 Refining 4.9 1.5 6.4 Chemicals 33.8 16.0 49.8 Machinery 80.8 75.0 155.8 Building materials 20.3 7.7 28.0 Food processing 11.2 10.0 21.2 Textiles 13.6 20.0 33.6 Other manufacturing 24.0 13.0 37.0 Construction 16.0 8.0 24.0 Transport 96.0 5.0 101.0 Commerce 19.5 201.0 220.5 Miscellaneous services 2.0 5.0 7.0 Education and health 25.0 0.0 25.0 Public administration and defense 47.0 0.0 47.0 Housing 160.0 0.0 160.0 Total 762.6 411.7 1,174.3 Sources: Estimates based on various sources: see Appendix E text. -68- Appendix E Page 3 of 4 Table E.2: ESTIMATED SECTORAL CAPITAL STOCKS (PRICE-ADJUSTED), 1981 (Billion yuan) Net fixed Circulating assets capital Total Agriculture Crops 89.3 17.3 106.6 Animal husbandry 21.7 11.5 33.2 Metallurgy 56.5 .18.6 75.1 Electricity 48.7 1.7 50.4 Coal 36.4 4.9 41.3 Petroleun Extraction 13.4 2.9 16.3 Refining 6.3 1.7 8.0 Chemicals 43.1 18.4 61.5 Machinery 103.1 86.3 189.4 Building materials 25.9 8.9 34.8 Food processing 14.3 11.5 25.8 Textiles 17.4 23.0 40.4 Other manufacturing 30.6 15.0 45.6 Construction 20.4 9.2 29.6 Transport 122.5 5.8 128.3 Commerce 24.9 231.2 256.1 Miscellaneous services 2.6 5.8 8.4 Education and health 31.9 0.0 31.9 Public administration and defense 60.0 0.0 60.0 Housing 204.2 0.0 204.2 Total 973.2 473.7 1,446.9 Source: Appendix Table E.1. See Appendix E text for how the price adjustment was made. --~ 6 9 - .dlppendi EI Table E.3: INCREASE IN STOCZS AS PERCENTAGE OF TOTAL GROSS CAPITAL FORMATION, 1970-80 IX current prlces In constant prices - China 26.2/a n.a. Other Low-Income Economies Indla 16.1/b 16.1/b Pakistan 6.17W 8.07W Sri LLanka 4.87iW 10.37W Middle-Income Economies Brazil 3.3/e 7.9/e South Korea 4.4 5.6 Malaysia 2.7/f 2.5/f Mexico 11.5 12.4 Phillppines 19.8 20.1 Thailand 7.7 8.0 Industrial Market Economies France 5.7 6.3 Germany, Federal Republic of 4.1 4.1 Italy 11.5 8.5 Japau 3.2 3.6 United Kingdom 1.9L& 2.5Z/ United States 3.2 3.6 MPS Economies /h Czechoslovakia 21.8 19.1 HIgary 20.2/i 15.6/i Poland 13.1 U.n. USSR U.&. n.a. Yugcolavia 17.3ZI 17.7/L la Circulating funds as percentage of total accuiulation. lb 1970-79. Ic Excluding 1975, for which no data on stocks is given. id Footnote in source reads: "Including a statistical discrepancy." /e 1970-79. !f 1971-80. L Beginning in 1973, "Increase in Stocks" includes the value of completed but unsold dwellings. lh Statistics for these countries are prepared according to t'.e System of Material Product Balances (MPS); the numbers below represent the increase Ln material circulating assets and in stocks as a percentage of total capital formation over the period indicated. I. Changes in incompLete capital formation are included in increase in mater- ial circulating assets and in stocks. Li 1970-79; depreciation of residential buildings is excluded from gross capital formation. Sources: China: SYC, 1983, p. 2:. Other countries: United Nation., Yearbook of National Accounts Sta- tiatlcs, 1981, Tables la and lb; aLso Tables 6a and 6b for some MPS economies. - 70 - Appendix F Page 1 of 6 DEMAND-PRODUCTION LINKAGE CALCULATIONS 1. As an experiment, we combined India's and Japan's final demand vectors (including foreign trade as well as domestic final demand) with China's intermediate flow matrix in order: (a) To assess the determinants of China's unusual production structure; and (b) To assess the efficiency of intermediate input use in China. 2. In (a), we multiplied China's Leontiel inverse matrix by India's (or Japan's) final demand vector, i.e.-, (I - AC) F, to obtain a new gross output vector, Qn. Converting this into percentages, we then separated the effect of the final demand vector from that of the input-output matrix by rearranging the following identity: Total effect Qc - QI = , Q i (Qn Qn) = (panQi) + (QcQn) in which: QCIQi = original gross output vector in percentage terms of China and India respectively (i = gross output vector in per- centage terms after the experiment 3. From the above identity, (QC - Q1) represents the total effect as each country has different final demand and intermediate flow structures. This may be broken down into two components, (Qn - qi) + (qc Qn). (Qn - qi) represents the effect of input-output coefficients since in Qn (from India's standpoint) final demand was held constant while input-output coefficients were varied (being replaced by China's), while as a residual, (Qc - Qn) is the effect of final demand. 4. In (b), we again took the cross product of China's Leontief inverse matrix and India's (or Japan's) final deqiand vector to obtain a new gross output for each sector, i.e., (I - AC) F . From this we subtracted India's original final demEnd vector to obtain the after-experiment intermediate demand vector, i.e., Nn = (I - AC)- F Fi - 71 - Appendix F Page 2 of 6 To assess the magnitude of the change in the intermediate demands as a result of the experiment, we divided Nn by India's original intermediate demand vector (N') and expressed this in percentage terms as follows: ( n - 1) x ioo N1 5. The results of the experiments are presented in Appendix Tables F.1 to F.4. Tables F.1 and F.3 compare the pattern of gross output in China with that in India and Japan respectively, and decompose the observed gross output differences into (a) those attributable to differences in the final demand pattern and (b) those attributable to differences in input-output coeffi- cients. Tables F.2 and F.4 show how much more (or less) of various categories of intermediate inputs wouLd be needed in China to produce the final demand vectors of India and Japan respectively than were actualLy used in those countries. 6. The input-output data for China came from Appendix TabLe C.5 (after price and other adjustments). Those for India are from Technical Notes on the Sixth Plan of India, 1980-85, Planning Commission, the Government of India, June 1981; and those for Japan are from "Interindustry Relations Table (1965)," Economic Statistics Annual (1970), the Bank of Japan, 1971. Table F.1: DETERMINANTS OF PRODUCTION STRUCTURE (CHINA-INDIA EXPERIMENT) Production structure (Z of total gross output) Effects Final demand Output attributable to: structure (%) structure (a) Final (b) Input- CGhina India China India after ex- Total demand output 1981 1979/80 1981 1979/80 periment effect structure coefficilnts Sector (Fc) (F) (Qc) (Q) (Qn) (QcQ) (QcQn) (Qn Qq) 1. Agriculture 24.1 30.9 21.8 24.4 26.2 -2.6 -4.4 1.8 2. Coal, petroleum & other mining 2.6 -2.5 8.8 1.1 5.7 7.7 3.1 4.6 3. Food processing 10.3 9.9 6.0 6.4 6.0 -0.4 0.0 -0.4 4. Textiles, wood & other manufacturing 8.6 11.0 10.7 9.0 12.6 1.7 -1.9 3.6 5. Paper, chemicals, metal products, metallurgy & building materials 3.8 2.2 15.0 13.1 13.3 1.9 1.7 0.2 6. Machinery 10.9 6.0 10.5 4.7 7.6 5.8 2.9 2.9 7. Construction 13.3 11.6 7.8 8.2 7.1 -0.4 0.7 -1.1 8. Public utilities & transport 2.7 5.1 6.1 7.7 7.0 -1.6 -0.9 -0.7 9. Commerce & nonmaterial services 23.7 25.8 13.2 25.3 14.4 -12.1 -1.2 -10.9 Total 100.0 100.0 99.9 99.9 99.9 o. - 73 - Appendix F Page 4 of 6 Table F.2: IMPACT OF CHINA'S INPUT-OUTPUT COEFFICIENTS ON INTERMEDIATE DEMANDS (CHINA-INDIA EXPERIMENT) India 1979/80 (Rs mln) Intermediate Intermediate Z change in Final demarnd before demand after intermediate Sector demind experiment experiment demand vF )(N-) tn 1. Agriculture 319,874 141,092 250,849 78 2. Coal, petroleum & other mining -25,900 46,801 150,697 222 3. Food processing 101,927 17,594 27,884 58 4. Textiles, wood & other manufacturing 113,554 55,287 159,952 189 5. Paper, chemicals, metal products, metallurgy & build- ing materials 22,498 225,080 267,294 19 6. Machinery 62,525 25,940 101,939 293 7. Construction 120,178 34,285 34,831 2 8. Public utilities & transport 52,584 93,755 100,486 7 9. Commerce & nonmater- ial services 267,085 208,901 46,427 -78 Total 1,034,325 848,735 1,140,359 34 Table F.3: DETERMINANTS OF PRODUCTION STRUCTURE (CRINA-JAPAN EXPERIMENT) Production strucutre (% of total gross output) Effects Final demand Output attributable to: structure (X) structure (a) Final (b) Input- China Japan China Japan after ex- Total demand output 1981 1965 1981 1915 periment effect structure coefficients Sector (Fc) (FJ) (QC) (Q) (Qn) (QC QJ) (QC - Qn) (Qn ) 1. Agriculture 24.' 1.3 21.8 6.8 11.2 15.0 10.6 4.4 2. Coal, petroleum & other mining 2.6 -2.5 8.8 0.8 6.6 8.0 2.2 5.8 3. Food processing iO.3 13.8 6.0 8.2 7.3 -2.2 -1.3 -0.9 4. Textiles, wood & other manufacturing 8.6 8.6 10.7 9.5 10.8 1.2 -0.1 1.3 5. Paper, chemicals, metal products, metallurgy & building materials 3.8 4.5 15.0 21.7 16.8 -6.7 -1.8 -4.9 6. Machinery 10.9 13.5 10.5 11.8 11.9 -1.3 -1.4 0.1 7. Construction 13.3 17.9 7.8 9.5 9.5 -1.7 -1.7 0.0 8. Public utilities & transport 2.7 5.6 6.1 7.2 7.6 -1.1 -1.5 0.4 9. Commerce & nonmaterial O 10 services 23.7 37.3 13.2 24.5 18.3 -11.3 -5.1 -6.2 m m Total 100.0 100.0 99.9 100.0 100.0 Ph 75-Appendix F Page 6 of 6 Table F.4: IMPACT OF CHINA'S INPUT-OUTPUT COEFFICIENTS ON INTERMEDIATE DEMANDS (CHINA-JAPAN EXPERIMENT) Japan, 1965 (current billion yen) Intermediate Intermediate % change in Final demand before demand after intermediate Sector demand experiment experiment demand (Fi) (NJ) 1. Agriculture 429.56 4,316.86 8,526.01 97 2. Coal, petroleum & other mining -842.58 1,433.15 6,094.57 325 3. Food processing 4,653.85 1,085.21 1,190.91 10 4. Textiles, wood & other manufacturing 2,892.91 3,747.74 5,680.31 52 5. Paper, chemicals, metal products, metallurgy & build- ing materials 1,523.18 13,647.62 11,910.02 -13 6. Machinery 4,551.45 3,745.58 4,922.39 31 7. Construction 6,067.58 572.48 1,526.32 167 8. Public utilities & transport 1,884.46 3,150.17 4,137.20 31 9. Commerce & nonmater- ial services 12,610.60 4,551.69 1,950.42 -57 Total 33,781.29 36,250.21 45,938.15 27 Appendix C -7 6 -T-s gie 1 of _3 Table C.1: INTERNATIONAL COMPARISON OP HOUSEHOLDlCONSUPTION STRUCTURE - NATIONAL ACCOUNTS DATA (Z of total) South China India Srl Lanka Shalland Korea Philippineas (1981) (1980) (1980) (1960) (1955) 01955) Food, beverages and tobacco 61.4 60.2 63.6 56.2 62.1 61.9 Fbod 33 3T7 I7.77 T63TT Nonalcoholic beveraoeo 0.9 0.3 2.1 35 }1.9 Alcoholic beverages 1.5 3.4 2.1 } I .Tobacco 2.2 5.5 4.7 2.8 3.7 Clothing and footwear 11.6 10.9 6.1 8.1 10.2/a 7.6/a Gross rent, fuel and power 7.8 6.7 5.2 9.6/b 13.3 11.5 Fuel and power ZWF - T3 Other 2.7 3.2 - - Furniture, furnishings and household equipment and opera- tion 6.5 4.0 5.5 4.7 3.2/c 3.7/c Household operation ZUT T C/d T.= Other 2.0 3.4 2.J -- Mhdical care and health expenses 1.4 7.0 1.8 5.9 2.6/e 1.5 Transport and communications 1.3 3.1 9.7 7.6 2.2 2.2 Personal transport equipment - U7! - - Other 6.6 8.8 7.0 Recreational, entertainment, educatlon and cultural activi- tles 1.5 3.7 4.5 ;.2 3.4/f 4 7/ Education TU. z. Uy l.7 - Other 0.8 3.6 3.5 Miscellaneous goods and servi- ces 8.4 4.5 3.7 3.8 2.2/h 6.9Wi Personal care TT.5 - - I Sr- Expenditures in restaurants, * cafes and hotels 2.9 1.5 1.3 - - Other 1.5 1.2 - - Total 100.0 100.0 100.0 100.0 100.0 100.0 /a Includes other personal effects. 717 Rent and water charges only. 7Ec Includes some recreational equipment such as radios, grasophones, records and pianos. 7T Includes fuel and light. Tei Includes personal care. 7F Includes expenditu'ss in restaurants, cafes and hotels, but excludes expenditure, in education. . Includes expenditures in restaurants, cafes and hotels as well as education and research. /b Excludes personal care, expendLtures in restaurants, cafes and hotels, but includes education and research, financial and other service. /i Includes personal care, financial and other services. Sources: China: Appendix Table C.5, adjusted by allocating consumption in com- merce (excluding catering, which Is estimated to be about Y 8 billion on the basis of data in SYC, 1983) and transport (ex- cluding passenger transport, which Ls estimated to be 46.18X of total transport on the basis of data in Appendix Table C.2) to the various items of material consumption (excludlng sub- sistence consumption in agriculture, which is estimated to be 75.091 of agricultural consumption on the basis of data in SYC, 1983). Other countries: Various editions of the UN Yearbook of National Accounts Sta- tistics: for India and Srl Lanka, LM1 ed., Table Z.,. *Frt- vate Flnal Consumption Expenditures by Type, In Current Prices;" for 7hailand, 1977 ed., Table 8a, "Private Final Con- sumption Expenditures by Object, In Purchasers' Values. at Current Prices;" for South Korea and the Philipplnes, 1969 ed., Table 7, 'Composition of Private Consumption Zxpendi- ture." ClaaSsficatIons of private consumption expendlture In the 1969 edition differ somewhat from those in later editlons; the differences have been reconclled where the data allow and otherwise indicated in the notes above. Appendlx C - 7 - Page 2 of 3 Table G.2a: INTERNATIONAL COMPARISON OF UR9AN HOUSEHOLW CONSUHPTION STRUCTURE BASED ON HOUSEHOLD SURVEY DATA (Z of total) /a China India Pakistan Sri Lanka Indonesia Thailand Philippinex (1981) (1973/74) (1971/72) (1973) (1968/69) (1962/63) (1965) Food, beverages and tobacco 60.9 70.3 49.8 52.5 57.8 47.7 55.2 Food I Nonalcoholic beverages } 68.7 47.1 49.6 53.9 43.8 51.9 Alcoholic beverages } Tobacco 1.6 2.7 2.9 3.9 3.9 3.3 Clothing and footwear 10.1 5.2 8.9 7.6 9.0 14.9 6.2 Gross rent, fuel and power 9.4 10.3 17.1 12.3 11.0 6.3/b 18.0/c Fuel and power 6.0 5.0 3.7 4.5/d Other 4.3 12.1 8.6 6.5 Furnituire, furnishings and household equipmenc and operation 4.5 2.4 5.0 14.3 4.9 10.3/e 5.5 Household operation Other Medical care and health expenses 0.5 2.3 1.8 1.5 3.6 4.3 1.8 Transport and communications 1.1 2.2 4.1 4.7 4.8 4.6/f 3-7/R Personal transport equipment Other Recreational, entertainment, edu- cation and cultural activities 6.4 3.2 3.6 3.9 5.2 6.4 6.6 Education 0.4 2.1 2.5/h 3.4 2.6 4.6/1 Other Miscellaneous goods and services 7.2 4.1 9.7 3.2 3.8 5.5 3.0 Personal care 3.1 4.3 1.7 3.e 3.2 2.9 Expenditure* in restaurants, cafes and hotels I1.0 5.4 1.5 - 2.3 0.1 Other I Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 /a Based on data for two cities (Jakarta and Bandung) only. 7b_ Includes rent only. Tc Including Interest on mortgages. 7d Including water. 7Te Including fuel and power, telephone, as well as expenditures on housing other than rent. T7? Excluding telephone. j Including wages of private chauffeurs. [ii Incuding stationery. 7T? Including allowances for students abroad. Sources: China: SYC, 1981, p.439, adjusted by applying coefficients for price adjustment used in compiling the input-output table (see Appendix Table B.2), with the following exceptions and refinements: (1) 1.64 for grain and 1.50 for nonstaple food (based on World Bank staff estiuates of price ratios for bread and cereals, and meats, respectlvely, between Chins and Indonesia; see Sultan Ahmed. "Interna- tional Comparison of Chinese Prices," unpublished World Bank paper. 1983); (2) 1.10 for articles for-daily use and recreation (as for metal products In Table B.2); (3) 2.13 for fuel (average of coefficients for coal and petroleum, weighted by export shares in Table C.2); (4) 4.875 for rent, which assumes a 2S return on cApital and makes allowance for imputed rent; and (5) no adjustment for transportation (coefficients in Table B.2 applies only to freight trans- port). Other countries: International Labor Office, Oousehold Income and Espenditure Statistics. No. 2 (1960-72) and No. 3 (1968-76), published In 1974 and 1979, respectlvely. Appendix G -7 8- Page 3 of 3 .~~~~~~~~~~~~~~~~ - Table G.2b: INTERNATIONAL COMPARISON OF RURAL HOUSEHOLD CONSUMPTION STRUCTURE BASED ON HOUSEHOLD SU1RVEY DATA (Z of total) QCina India Pakistan Sri Lanka Ihailand Philippines (1973/74) (1971/72) (1973) (1962/63) (1965) Food, beverages and tobacco 68.4 77.7 58.2 63.4 49.0 69.7 Food ' Nonalcoholic beverages } 76.0 56.0 59.9 45.7 66.2 Alcoholic beverages ? Tobacco 1.7 2.2 3.5 3.3 3.5 Clothing and footwear 8.4 7.3 10.1 7.5 17.1 7.2 Gross rent, fuel and power 13.7 6.5 10.8 11.2 5.8/a 8.8/b Fuel and power 5.6 5.1 4.5 3.7 Other 0.9 Furniture, furnishings and household equipment and operation 3.2 1.3 4.3 4.3 9.5/c 3.8 Household operation Other .4edical care and health expenses 0.9 2.1 2.1 1.8 4.5 1.7 Transport and commnications 0.8 1.3 1.8 3.8 3.6/d 1.8/e Personal transport equip- ment Other Recreational, entertainment, education and cultural activ- ities 2.2 0.8 1.2 3.1 3.0 4.5 Education 0.5 0.8 2.21f 1.0 2.8Jg Other Miscellaneous goods and ser- vices 2.4 3.0 11.5 4.9 7.5 2.5 Personal care 1.9 2.7 1.9 2.2 2.4 Expenditures in restau- rants, cafes and hotels I1.1 8.8 3.0 5.3 0.1 Dther } Total 100.0 100.0 100.0 100.0 100.0 100.0 /a Includes rent only. 7i Including interest on mortgages. 7;9 Including fuel and power, telephone, as well as expenditures on housing other than rent. Td? Excluding telephone. 7T Including wages of private chauffeurs. 7T Including stationery. a7 Including allowances for students abroad. Sources: China: SYC, 1981, p. 443, with the following adjustments: (1) almost aU of "housing" expenditures, which are purchases of bulilding mater- ials for investneut rather than consiumption, are excluded; (2) expenditures on food are broken down into staples (Y 61.07), non- staples (Y 41.50) and other food (Y 11.26) on the basis of data from Hubei household surveys, and price adjustment coefficients of 1.797 and 1.254 are applied to the first two categories of food expenditures to mke them comparable with prices in other coun- tries; (3) Imputed rural rent is estimted .to be about Y 10.96 per person per year; (4) price adjustment coefficients from Table B.2 are applied to other items; and (5) expenditures on daily commodi- ties and services are llacated among the last five categories in this table. Other countries: See Appendix Tabl- ;.2a. - 79 _ Appendix H Page 1 of 2 TOTAL FACTOR PRODUCTIVITY GROWTH 1. ~ Total factor productivity (TFP) growth is defined as the difference between the growth rate of output and the growth rates of total inputs, usually weighted by their respective income shares. The difference represents quality changes in inputs (education, new techniques embodied in new capital goods), advances in knowledge, economies of scale associated with the rapid growth of markets, and resource reallocation from low-productivity sectors to higher-productivity sectors. 2. Methods and problems in estimating TFP growth are discussed in the sources for Table 3.16 in this Aninex. In the case of China, the relative weights that should be attached to the different inputs are particularly hard to determine. We therefore experimented with a wide range of weights for labor and capital. in Table H, the weights for labor and capital are 60% and 40% respectively in column A, and 40% and 60% in column B. 3. The real national income (net material product) and labor force data in Table H are straight from SYC 1984, pp. 30 and 107. But this source con- tains capital stock data for earlier years only for the state-owned sector. It was thus necessary to combine this source with other sources in making roughly comparable estimates of China's total capital stock (including the nonstate sectors) in both recent and earlier years, so that a capital stock growth rate could be calculated. 4. The estimated capital stocks are Y 50.0 billion for 1952, Y 453.6 billion for 1975 and Y 762.7 billion for 1981. The definition and coverage of these capital stocks are unavoidably different from those underlying Appendix Tab'le E.1. Specifically, these numbers refer to fixed assets,, both state and nonstate, at their original values, gross of depreciation. They cover the five material production sectors, including nonproductive assets within them, but excluding other housing (peasant housing or that not owned by enter- prises), other nonproductive assets, and nonmaterial services. The main sources of data for the 1952 estimate are: Ten Creat Years, and Shigeru Ishikawa's National Income and Capital Formation in Mainland China - an examination of official statistics, 1965, the Institute of Asia Economic Affairs, Tokyo, Japan. - 80 - Appendix H Page 2 of 2 Table H: CHINA: ESTIMATED TOTAL FACTOR PRODUCTIVITY GROWTH, 1952-81 (Z p.a.) Real Total factor national Labor Capital productivity income force stock (A) (B) 1952-81 6.0 2.6 9.9 0.5 -1.0 1952-75 6.0 2.7 10.1 0.3 -1.1 1975-81 5.9 2.1 9.0 1.0 -0.3 - 81 - Appendix I Page 1 of 10 PERSONAL INCOMES AND INCIDENCE OF POVERTY Personal Incomes by Province 1. In Table I.1, data on wage levels of staff and workers by trovince have been adjusted to take account of welfare and health and other insurance benefits. Provincial urban participation rates have been estimated and com- bined with the adjusted wage level data to provide estimates of urban per capita income by province. In Table 1.2 estimates of average personal income per capita by province have been made by weighting the average urban per capita income estimates from Table 1.1 with published data on rural per capita incomes. Incidence of Poverty 2. Tables 1.3-I.9 provide estimates of urban and rural poverty, both nationally and for the three provinces of Jiangsu, Hubei and Gansu. They are based on estimates of minimum nutritional requirements and have been calcula- ted using a methodology similar to that used by the World Bank in a number of other countries, e.g., Indonesia. It should be recognized that "poverty" in China is not comparabLe with "poverty" in many other developing countries in the sense that poor people in China are assured of relief grain, etc. How- ever, the analysis is useful in indicating the large intertemporal and inter- regional variations in the proportion of people below a minimum income Line. - 8 2 - Appendix I Page 2 of 10 Table 1.1: PROVINCIAL URBAN WAGES AND PER CAPITA INCOMES, 1982 State Urban collectives Average Partici- Average urban Average Adjus- z Average Adjus- Z wage per pation per capita wage ted /a workers wage ted /a workers worker rate lb income (Yuan) (Yuan) (Yuan) (Yuan) (Yuan) (Yuan) North Region Beijing 896 1,090 82 716 809 18 1,040 66 686 -Tlanjin 865 1,053 77 672 754 23 984 62 610 Hebei 800 974 82 648 732 18 930 73 679 Shanxi 830 1,010 81 600 678 19 947 67 635 Nei Honggol 868 1,056 79 670 757 21 994 47 467 Subtotal 846 1,030 81 659 745 19 976 63 615 Northeast Region Llaoning 828 1,008 71 675 763 29 937 60 562 Jilin 863 1,050 72 637 720 28 958 52 498 Heilongjiang 908 1,105 73 703 794 27 1,021 49 500 Subtotal 864 1,052 72 676 764 28 971 54 524 East Region Shanghai 920 1,120 78 750 848 22 1,060 63 668 - Jiangsu 748 910 63 626 707 37 835 71 593 Zheiiang* 783 953 62 671 758 38 879 67 589 Anh1i 772 940 72 575 650 28 858 59 507 Fujian 793 965 73 691 781 27 915 62 568 Jiangxi 758 923 80 625 706 20 879 50 440 Shandong 797 970 76 679 767 24 921 66 608 Subtotal 799 972 71 655 740 29 905 63 570 Central/South Region Henan 789 960 81 604 683 19 907 63 572 Hubei 760 925 79 657 742 21 887 62 550 Hunan 772 940 78 670 757 22 899 64 576 Guangdong 967 1,177 76 845 955 24 1,124 66 742 Guangxi 781 951 83 647 .731 17 913 60 548 Subtotal 827 1,006 79 712 804 21 964 64 617 Southwest Region Sichuan 798 971 77 633 715 23 912 62 566 Guizhou 815 992 98 632 714 2 986 46 454 Yunnan 825 1,004 99 676 764 1 1,002 53 531 Xizang 1,319 1,605 91 1,134 1,281 9 1,576 66 1,040 Subtotal 815 992 84 639 722 16 949 57 541 Northwest Region Shaanxi 831 1,011 84 619 700 16 961 64 615 Gansu 936 1,139 90 649 733 10 1,099 59 648 Qinghai 1,155 1,406 85 848 958 15 1,339 51 683 Ningxia 932 1,134 87 646 730 13 1,082 54 584 Xinjiang 968 1,178 89 722 816 11 1.138 43 490 Subtotal 924 1,125 87 668 755 13 1,077 54 581 Total 836 1,017 77 671 758 23 957 60 574 /a Wages in state-owned enterprises were-increased by a ratio of 1.217 and wages in collective enterprises were increased by a ratio of 1.113 to take account of welfare and health and other insurance benefits. /b Participation rate - number of staff and workers/noncommaue population. Source: SYC, 1983, page 488. Appendix I Page 3 of 10 Table 1.2: PROVINCLAL PERSONAL INCOME PER CAPITA, 1982 (Yuan) Rural Urban Total Average Average Average income Z pop. income Z pop. income North Region Beijing 433 42 686 58 580 TLanjin 326 47 610 53 477 Hebel 236 87 679 13 294 Shanxi 227 81 635 19 305 Nei Monggol 273 70 467 30 331 Subtotal 250 77 615 23 334 Northeast Region Liaoning 337 62 562 38 422 Jilin 178 66 498 34 287 Heilongjiang 250 57 500 43 358 Subtotal 265 61 524 39 366 Epst Region Shanghai 437 37 668 63 582 Jiangsu 309 84 593 16 354 Zhejiang 346 86 589 14 380 Anhui 269 88 507 12 298 Fujian 268 85 568 15 313 Jiangxi 270 82 440 18 301 Shandong 304 90 608 10 334 Subtotal 300 85 570 15 340 Central/South Region Henan 217 90 572 10 247 Hubei 286 82 550 18 334 Hunan 284 88 576 12 319 Guangdong 382 83 742 17 443 Guangxi 235 88 548 12 273 Subtotal 279 86 617 14 326 Southwest Region Sichuan 234 88 566 12 274 Gaizhou 230 88 454 12 257 Yunnan 232 88 531 12 268 Xizang 220 85 1,040 15 343 Subtotal 233 88 541 12 270 Northwest Region Shaanxi 218 84 615 16 282 Gansu 174 85 648 is 245 Qinghal 222 72 683 28 351 Ningxia 205 77 584 23 292 Xinjiang 277 55 490 45 373 Subtotal 214 78 581 22 295 Total 269 79 574 21 333 - 0- - .: .Sources: Almanac of China's Economy, 1983 and Table I.1. Appendix I -84 - Page 4 of 10 Table I.3: ENERGY AND PROTEIN REQUIREMENTS Energy Protein 1. Requirement of average person per day 2,185.2 kcal 35.9 gm 2. Nutrition conversion rate of rice per kg 3,660.0 kcal 64.0 gm 3. Nutrition conversion rate of wheat flour per kg 3,500.0 kcal 113.0 gm 4. Requirement per capita per year of rice 215.0 kg 202.0 kg 5. Requirement per capita per year of wheat flour 225.0 kg 114.0 kg Sources: 1. China: The Health Sector (World Bank, 1984), Tables D-9 and Dll, pp. 170 and 172. 2&3 Ibid, Supplementary Paper 7 ("Trends in Food and Nutrient Availability in China 1950-81"), page 7. 4. Line 1 x 360 Line 2. 5. Line 1 x 360 s Line 3. - 85 - Appendix I Page 5 of 10 Table I.4: URBAN AND RURAL POVERTY LINES Urban Rural Rice Wheat Average Rice Wheat Average 1. Average price (Y per jin) 0.187 0.194 0.191 0.165 0.180 0.173 2. Expenditures on grain (Y) 80.4 87.3 83.9 71.0 81.0 76.0 3. Expenditures on food (Y) 100.5 109.0 104.8 88.7 101.3 95.0 4. Poverty line (Y) 160.0 173.0 167.0 130.0 149.0 140.0 Sources: 1. Urban prices from Beijing household income and expenditure sur- vey: rural prices based on procurement prices in 1982 of Y 231/ ton for rice and Y 314/ton for wheat and converted to milled basis using conversion factors of 0.7 for rice and 0.87 for wheat which were the conversion factors used in China: The Health Sector, p. 80. 2. Line 1 x Lines 4 or 5 from Table I.3. 3. Line 2 x 1.25 to take account of requirements for a few other food commodities including vegetables, cooking oil, etc. 4. Line 3 - 0.63 in urban areas which is the proportion of food expenses in total expenses of the urban income group with food expenses of Y 100-110 per capita per year; in the case of rural areas, the equivalent percentage (from the Hubei survey) of 0.68 has been used. -86- Appendix I Page 6 of 10 Table I.5: URBAN INCOME DISTRIBUTION, 1981/82 1981 1982 Z of No. of X of No. of Income per house- persons/ Z of house- persons/ X of capita holds household people holds household people Below Y 240 2.05 5.60 2.7 0.92 5.88 1.3 Y 240 - Y 300 5.46 5.22 6.8 3.68 5.22 4.7 Y 300 - Y 420 31.81 4.66 35.1 25.63 4.62 28.6 Y 420 - Y 600 42.29 4.00 40.1 45.40 4.02 44.1 Y 600 - Y 720 11.90 3.70 10.4 14.20 3.80 13.1 Over Y 720 6.49 3.20 4.9 10.17 3.34 8.2 Total 100.00 4.24 100.0 100.00 4.14 100.0 Sources: SYC, 1981, p. 438 and 1983, p. 493. Table 1.6: RURAL INCOME DISTRIBUTION, 1979-82 1979 1980 1981 1982 No. of No. of No. of No. of % of persons/ % of persons/ % of persons/ % of persons/ Income per house- house- % of house- house- % of house- house- 2 of house- house- 2 of capita holds hold people holds hold people holds hold people holds hold people Below Y 100 19.3 6.0 19.61 9.8 6.0 10.07 4.7 6.0 4.89 2.7 6.0 2.87 Y 100 - Y 200 53.2 6.0 54.04 51.8 6.0 53.21 37.9 6.0 39.46 24.1 6.0 25.59 Y 200- Y 300 20.4 6.0 20.72 25.3 6.0 25.99 34.8 6.0 36.23 37.0 6.0 39.29 Y 300 - Y 400 5.0 5.0 4.23 8.6 5.2 7.65 14.4 5.4 13.49 20.8 5.5 20.24 Y 400 -Y 500 1.5 4.4 1.12 2.9 4.5 2.23 5.0 4.6 3.99 8.7 4.8 7.39 Over Y 500 0.6 2.7 0.28 1.6 3.1 0.85 3.2 3.5 1.94 6.7 3.9 4.62 Sources: National household income and expenditure survey data and assumptions on household size based on data from Hubei. Oa la Cst - 88 - Appendix I Page 8 of 10 Table 1.7: INCIDENCE OF POVERTY, 1979-82 (Z of population) 1979 1980 1981 1982 1. Price deflator - Urban 1.000 1.060 1.085 1.107 2. Rural 1.000 1.031 1.090 1.154 3. Poverty line based on rice - Urban 145 153 157 160 4. Rural 113 116 123 130 5. Poverty line based on wheat - Urban 156 166 170 173 6.. Rural 129 133 141 149 7. Average poverty line - Urban 151 160 164 167 8. Rural 121 125 132 140 9. Poverty incidence based on rice - Urban n.a. n.a. 2 1 10. Rural 27 19 14 11 11. Total n.a. n.a. n.a. 9 12. Poverty incidence based on wheat - Urban n.a. n.a. 2 1 13. Rural 35 28 21 15 14. Total n.a. n.a. n.a. 12 15. Poverty incidence based on wheat/rice - Urban n.a. n.a. 2 1 16. Rural 31 23 18 13 17. Total n.a. n.a. n.a. 11 Sources: 1 General retail price index. 2 Weighted average of rural market price index and implicit price index for staples in the Hubei rural household income and expenditure survey. 3-8 Lines 1 and 2 x Line 4 from Table I.4. 9-17 Lines 3-8 applied to data in Table I.5 and assuming that the population distribution in each income group is uniform. - 89 - Appendix I Page 9 of 10 Table I.8: URBAN AND RURAL INCOME DISTRIBUTION IN JIANGSU, HUBEI AND GANSU, 1982 Percentage of Number of Number of Number of population in Income per households in sample personsl people in sample each income group capita Jiangsu Hubei Gansu household Jiangsu Hubei Gansu Jiangsu Hubei Gansu Urban Below Y 240 1 n.a. 5 5.9 6 n.a. 30 0.2 n.a. 3.2 Y 240 - 300 21 n.a. 13 5.2 109 n.a. 68 4.2 n.a. 7.4 Y 300 - 420 186 n.a. 65 4.6 856 n.a. 299 32.8 n.a. 32.4 Y 420 - 600 288 n.a. 83 4.0 1,152 n.a. 332 44.2 n.a. 36.0 6 600 - 720 86 n.a. 33 3.8 327 n.a. 125 12.5 n.a. 13.5 Over Y 720 48 n.a. 21 3.3 158 n.a. 69 6.1 n.a. 7.5 Total 630 n.a. 220 2,608 n.a. 923 100.0 100.0 100.0 Rural Below Y 100 1 87 6.0 } 6 522 1 0.1 21.1 129 }174 }3.2 Y 100 - 150 } 28 103 6.0 } 168 618 } 3.1 24.9 Y 150 - 200 124 124 84 6.0 744 744 504 13.6 13.8 20.3 Y 200 - 300 330 420 93 6.0 1,980 2,520 558 36.2 46.9 22.5 Y 300 - 400 275 241 37 5.5 1,513 1,326 204 27.6 24.7 8.2 Y 400 - 500 130 98 12 4.8 624 470 58 11.4 8.8 2.3 Over Y 500 112 36 4 3.9 437 140 16 8.0 2.6 0.7 Total 1,000 948 420 5,472 5,374 2,480 100.0 100.0 100.0 Sources: Household income and expenditure survey data provided by provincial authorities; urbqn household size data are the national urban averages from the SYC, 1983, p. 493; rural household size data are the Hubei averages. - 90 - Appendix I Page 10 of 10 Table I.9: INCIDENCE OF POVERTY IN JIANGSU, HUBEI AND GANSU, 1982 (% of population) Jiangsu Hubei Gansu Urban .. n.a. 2 Rural 3 3 41 Total 3 n.a. 35 .Sources: Based on household income and expenditure survey data provided by provincial authorities and using poverty lines of Y 167 in urban areas and Y 140 in rural areas. 9 _9 - Appendix J Page 1 of 21 FINANCIAL ESTIMATES AND PROJECTIONS This set of worksheets shows how various quantitative estimates for China in Chapter 9 of the Main Report were derived. These include 1981 sta- tistics, 1978 data (saving only), and projections for the year 2000. Page No. Worksheets .A. Income Flows, 1981 (for Figure 9.1) ................... ...... 2 B. Sources of Saving, 1978 (for Table 9.1) .......... 7 C. Sources of Saving, 1981 (for Table 9.1) ..................... 11 D. Subsidies, 1981 (for Table 9.2) ................... ........ 14 E. Income Flows for Pie Charts (For Tables 9.6 and 9.7) .... es.. 16 Supplementary Worksheets 1. Budgetary Accounts. 1981 .................................... 19 2. Government Extrabudgetary Accounts, 1981 ................. ... 21 Note: SYC refers to the Statistical Yearbook of China (various years), while MOF indicates information provided to the economic mission by the Ministry of Finance. -92- Appendix J Page 2 of 21 WORKSHEET A: INCOME FLOWS, 1981 (for Figure 9.1) (Y bilLion) 1. Indirect taxes Budgetary indirect taxes Y 55.4 billion (SuppLementary Worksheet 1) Extrabudgetary indirect taxes 4.6 (SuppLementary Worksheet 2) Total Indirect Taxes 60.0 2. Government subsidies Budgetary subsidies 44.3 (Figure 9.2) Extrabudgetary Government subsidies 0 (by assumption) Government subsidies 44.3 3. GDP at purchasers' prices 457.73 (Appendix Table C.2) 4. GDP at producers' prices GDP at purchasers' prices 457.73 Less: Indirect taxes -60.00 397.73 Plus: Government subsidies +44.30 GDP at producers' prices 442.03 5. Wages and earnings Wages and self-employment earnings outside agriculture 110.03 (Appendix Table C.2) '#ages, self-employment earnings, depreciation, and taxes in agriculture 158.65 t ' " ) Rent: Agricultural /a 2.98 Nonagricultural la 2.97 Bonuses dra-wn from enterprise profits 7.20 (very rough estimate) Total nonagricultural wages and earnings 120.20 Agricultural incomes 161.63 93 Appendix J Page 3 of 21 Total wages and earnings (before tax) 281.83 (120.2 + 161.63) Less: AgricuLtural taxes -4.30 (Appendix Table C.2) Total wages and earnings (after tax) 277.53 (281.83 - 4.3) 6. Profits GDP at producers' prices 442.03 Less: Wages and earnings (before tax) -281.83 Profits 160.20 7. Direct taxes and levies Budgetary profit taxes and remittances 87.74 (Supplementary Worksheet 1) Extrabudgetary profit taxes and remittances 25.96 (Supplementary Worksheet 2) Total agricultural taxes 4.30 (Appendix Table C.2) Total Direct Taxes and Levies 118.00 8. Net profits after taxes and levies Total Enterprise Profits 160.20 Less: Profit taxes and remittances -113.70 (87.74 + 25.96) Net profits after taxes and levies 46.50 9. Government revenue Budgetary revenue 145.94 (Supplementary Worksheet 1) Government extrabudgetary revenue 32.06 (Supplementary Worksheet 2) Total Government Revenue 178.00 10. Dividends /b 1.50 (very rough estimate) - 94 - Appendix J Page 4 of 21 11. Retained profits Net profits after taxes and levies 46.50 Less: Dividends -1.50 Retained profits 45.00 12. Other uses of Government revenue Government revenue 178.00 Less: Government subsidies -44.30 Other uses of Government revenue 133.70 13. Total Household Incomes Wages and earnings after tax 277.53 Plus: Dividends 1.50 Household income 279.03 14. Private consumption GDP at purchasers' prices 457.73 Less: Saving 131.70 (Worksheet C) Less: Public consumption 73.30 (Appendix Table C.4) Private consumption 252.73 15. Government transfers to households Budgetary transfers 3.00 (Supplementary Worksheet 1) Extrabudgetary transfers 0.70 (Supplementary Worksheet 2) Total Government Transfers 3.70 16. Enterprise transfers and subsidies to households Enterprise housing subsidies 3.70 (Main Report, Table 9.2) State and urban collective enterprise transfers /c 4.17 Commune and brigade enterprise transfers Id 0.13 Total Enterprise Transfers and Subsidies to Households 8.00 _ 95 _ Appendix J Page 5 of 21 17. Household self-financed consumption Private consumption 252.73 Less: Government transfers -3.70 Less: Enterprise transfers and subsidies -8.00 Household self-financed consumption 241.03 18. Public consumption 73.30 (Appendix Table C.4) 19. Government-financed public consumption Budget-financed public consumption 59.30 (Supplementary Worksheet 1) Extrabudgetary public consumption 6.00 (Supplementary Worksheet 2) Total Government-financed Public Consumption 65.30 20. Enterprise-financed public consumption Health expenditures 4.40 (China: The Health Sector, WorLd Bank, 1984, p. 69) Education /e 2.00 Other public consumption 1.60 (rough estimate) Total Enterprise-Financed Public Consumption 8.00 21. Saving 131.70 (Worksheet C) 22. Government saving 64.70 (Worksheet C) 23. Enterprise saving 29.00 (Worksheet C) 24. Household saving 38.00 (Worksheet C) la In Appendix Table C.2, total rent ("profits and taxes" plus depreciation) is Y 8.80 billion. It is assumed very roughly that this is distributed as follows: agricultural households 2.98, nonagricultural households 2.97, and the remainder is part of profits (enterprise and government housing). l/b In 1981 the level of dividends paid to households was most likely very low, probably even lower than the tentative estimate presented here. Nevertheless, it is useful to have this category since dividends may become more important in the future. - 96 - Appendix J Page 6 of 21 /c It is estimated very roughly that pensions and other employee benefits amzounted to about 42 of the total wage bill (Y82.0 billion -- SYC 81, p. 432), and that there were Y 0.89 billion of other state and urban collective enterprise transfers to households. /d Assumes transfers were equivaLent to 1Z of the wage bill (Y 13.1 billion - SYC 81, p. 195). /e Recurrent expenditures by provinces, enterprises, etc. were Y 3.0 billion in 1979 and Y 2.3 billion in 1982 (Annex A, Table 5.2). On this basis it is estimated that 1981 expenditures were Y 2.5 billion, of which Y 2.0 billion was Government extrabudgetary expenditures. - 97 _ Appendix J Page 7 of 21 WORKSHEET B: SOURCES OF SAVING, 1978 (for Table 9.1) (Y billion) 1. Budgetary saving (note that subsidies are ignored on both the revenue and the expenditure sides, since they don't make any difference in these calcula- tions). Total revenue Y112.11 billion (SYC 81, p. 403) Less: Revenue from loans 0.30 (MOF) Adjusted revenue 111.81 Capital expenditure: Capital construction 45.19 (SYC 83, p. 448) Modernization and new product development 6.32 ( ) Circulating capital 6.66 ( " ) Education, culture, science and public health /a 1.13 ( " ) AgricuLture /b 1.30 ( ) Total Capital Expenditure 60.60 Current expenditure Total Expenditure 111.10 (SYC 81, p. 403) Less: Capital expenditure -60.60 Current expenditure 50.50 Saving Total Revenue 111.81 Less: Current expenditure -50.50 Budgetary saving 61.31 2. Individual saving Net increase in bank accounts 2.90 (SYC 81, p. 410) Increase in currency in circulation 1.66 (IMF, International Financial Statistics) Household investment in fixed 7.24 assets /c Private stockbuilding 2.00 (rough estimate) Total Individual Saving 13.80 - 98 - Appendix J Page 8 of 21 3. Commune and brigade enterprises Profits Id 8.40 Profit tax -0.20 (rough estimate) Noninvestment uses of retained profits -0.50 (rough estimate) Saving from retained profits /e 7.70 (8.4 - 0.2 - 0.5) Depreciation /f 0.70 Total Saving/Investment 8.40 (7.7 + 0.7) 4. Urban collective enterprises Profits /g 6.40 Retained profits 0.60 (10% of total) Saving from retained profits 0.30 (50Z of retained profits) Depreciation /h 0.75 Retained depreciation funds 0.30 (40% of total) Total Saving/Investment by Urban Collectives 0.60 (0.3 + 0.3) 5. State enterprises Retained profits 2.10 (Shidang Jizhong Zijin, Baozheng_Zhongdian Jianshe, Beijing: Zhongguo Caizheng Jingji Chubanshe, 1983, p. 14) Saving/investment from retained profits 1.26 (60% of total retained pro- fits) Depreciation /i 12.33 Retained by enterprises 4.11 (33% of total depreciation funds) Total Saving/Investment by State Enterprises 5.37 (1.26 + 4.11) 6. Government extrabudgetary saving (identified) Urban collectives nonretained after-tax profits 3.20 (6.4 - 2.56 - 0.64) Urban collectives nonretained -depreciation funds 0.45 (0.75 - 0.3) State enterprise depreciation funds (nonretained, not including funds turned over to budget)/j 6.02 Banking system retained profits (1979 figure)/k 4.95 (SYC 83, p. 450) Total Identified Extrabudgetary Government Saving 14.62 :f~~~~~~~~~~~~~~~~~ 9 .. - ~ 99 Appendix J Page 9 of 21 7. Total saving Total gross domestic saving 120.45 (Estimate based on SYC, on same principles as in Appendix Table A.7) 8. Total identified sources of saving 104.10 (items 1-6) 9. Allocation of residual Total Residual 16.35 (120.45 - 104.1) Added to: Government extrabudgetary saving 12.26 (assumed 3/4 of total) Individual saving 4.09 (assumed 1/4 of total) 10. Saving by institutional sectors Total 120.45 Households 17.89 17.89 Households Commune and brigade enterprises 8.40 } Urban collectives 0.60 } 14.37 Enterprises State enterprises 5.37 } Budget 61.31 } 88.19 Government Government extrabudgetary 26.88 } /a investment expenditures assumed to be 10% of these categories in the state budget. /b This assumes that all expenditure on opening up new land and agricultural mechanization is investment expenditure, all commune support is current expenditure, and 12% of other expenditure on agriculture is capital expen- diture. The breakdown of budget expenditure on agriculture is from MOF. /c It is assumed that this was 40% of the 1982 level (see Worksheet C). /d 1978 gross output value or sales is roughly estimated at Y 42 billions and it is assumed that the profit rate on sales was 20%. /e It is assumed that total uses of retained prefits just equalled retained profits earned, so saving equals investueat. /f Total fixed assets are very roughly estimated at Y 20 billion, and the average depreciation rate is assumed te be 3.5%. - 100 - Appendix J Page 10 of 21 /g Assuming that the 1978 share of industrial and commercial income tax receipts in total tax receipts other than industrial-commercial tax and agricultural tax was the same as in 1981. In 1981 the ratio was 4.4 t 6.31 = 0.697 (see Worksheet C and SYC 83, p. 446). In 1978 the denomi- nator was Y 3.96 billion (SYC 83, p. 446), so the estimated total indus- trial and commercial income tax receipts were Y 2.76 billion. From this must be subtracted Y 0.2 billion in profit tax receipts from collective enterprises, Leaving Y 2.56 billion as estimated profit tax payments by urban collectives. If the average tax rate was 40%, total profits would be Y 6.4 billion. /h Assuming the profit rate on fixed assets was 30%, which means the total value of fixed assets was Y 21.3 billion. At an average depreciation rate of 3.5%, total depreciation funds would be Y 0.75 billion. /i It is assumed that the ratio of depreciation funds to original value of fixed assets in the state sector was the same in 1978 as in 1981. In 1981 it was 15.85 - 576.92 = 2.75% (see Worksheet C and SYC 83, p. 12). This would make the 1978 value of depreciation funds 448.82 X 2.75Z = Y 12.33 billion (SYC 83, p. 12). Ii Total was 12.33, of which 4.11 (33% of the total) was retained and 2.2 turned over to the budget (based on Covernment budget statistics). /'k It. is assumed that all retained profits of the banking system were saved. -101- Appendix J Page 11 of 21 WORKSHEET C: SOURCES OF SAVING, 1981 (for Table 9.1) (Y billion) 1. Budgetary saving Y39.34 billion (Supplementary Worksheet 1) 2. Individual saving Net increase in bank deposits 12.42 (SYC 83, p. 454) Net increase in currency in circulation /a 5.01 (SYC 83, p. 454) Fixed investment by households /b 14.50 Agricultural stockbuilding /c 6.07 Total Household Saving 38.00 3. Commune and brigade enterprises Net profits after tax 11.30 (SYC 81, p. 195) Noninvestment expenditures from after-tax profits 0.90 ( ) Saving/investment from after-tax profits 10.40 (11.3 - 0.9) Depreciation funds /d 1.30 Total Saving by Commune and Brigade Enterprises 11.70 (10.4 + 1.3) 4. Urban collective enterprises Total Profits /e 9.70 Retained profits 2.90 (30% of total) Saving/investment from retained profits 1.70 (602 of retained profits) Depreciation funds /f 1.30 Retained depreciation funds 0.60 (50% of total depreciation funds) Urban collectives' saving 2.30 (1.7 + 0.6) 5. State enterprises Retained profits 11.80 (Shidang Jizhong Zijin.... p. 14) Saving/investment from retained profits 7.10 (60% of total retained profits) Depreciation funds / 15.85. Retained depreciation funds 7.90 (50Z of total depreciation funds) Total State Enterprises Saving 15.00 (7.1 + 7.9) 102 - Appendix J Page 12 of 21 6.- Ceveum =__bettI vm (id4tified) Sttate Saterprise depreciaties fmds: T,tal 15.85 - )lAs: eteias -1.90* Legs: Twi~m to st-ta- budgt -2.60 (rough estimate) S_in!inr (tr over to riqmmt orWaizatioee) 5.35 Urban collectives' 4epr*eietise f_u: Total 1.10 las eteimm -0.60 | tJ ~~~~~~~.50 Urbas cEtletives aftoortasi meerstaine "pfits: Total Profits 9.70 Less: Taxed -3.40 Less: Retained -2.90 1e"inder 3.40 kii syste retaia.d profits l1 1.70 (SYC 81, p. 408) IL xe10.95 - 11.0 7. Ot.ze se !m'vestmei~t 130.36 (Appendix Table C.2) Fluss foroiga trade srplus 1.34 ( " " ) total Saving 131.70 J. Ttpcl. i475i4ie r of svim 117.34 (items 1-6) TotaL fevieg 131.79 Leoss Idtified seeesS -117.34 Se#i~~~~~~l ~ ~Z4. 36 Aess tht all of tkis resi_t is pert of Coveruuent extrabudgetary saving. - 103 - 10. Saving by institucional sectors Total 131.70 Households 34.0W 36.6 se.isalEs Commune and brigade enterprises 11.* I Urban collectives 2.3 ) 29.O e.tcrisea State enterprises 15.00 - Budget 39.34 ) M7 OiinC Government extrabudgetary 25.36 7 /a It is issumed that all of the net increase in curre*cy in circuLation was held by individuals rather than organizatiess. /b The 1982 figure was Y 18.1 billion (ZW lSs 9.31) It is assumed that the 1982 figure ws This is a rough estimate. It apears tMo beildigs of arsis mtockpiles by peasants in 1981 was extensive. /d Based on a figure of Y 37.6 billion for *t&inal value of fixed assets (SYC 81, p. 195) and a depreciation rate of 3.51. /e Based on a rough estimate of Y 4.4 billies for induserial an cessmrcial income tax receipts in 1981, of wkich Y 1.6 billies ceesisted of profit tax payments by commune and brigad* esacerpeis (SYC 81, p. 195), _waning that Y 3.4 billion was profit tar pay ts - by ab eollective.. It is assumed that the average rate of tax me 3MS. /f It is assumed that the profit rate *e the *eigiael valee of fixed assets was 30%, in which case the latter wea 1 32.3 billi.. The average 4epte ciation rate is assumed to 1e 3.51. J Total depreciation (in Appendix Table C.2) is Y 24.2 billion; from this is subtracted agricultural depreciation (Y 2.65 billies), uribs and rwral collectives' depreciation (Y 2.4 billies), dpreciaties fwr oducatims an health and public administratios and Woom (Y 1.4 billis), and Y 2.3 billion of depreciation on housing. It i* aei thea ab_e belt of housing depreciation is for urhen h.seie, of %ich two-tbirds is e rged to enterprises. /h It is assumed that all retained profits by the beskiag system _ue saved. - 104 - Appendix J Page 14 of 21 WORKSHEET D: SUBSIDIES, 1981 (for Table 9.2) I. Total Price Subsidies: Y 32.77 billion (MOF) 1. Subsidies on industrial inputs into agriculture: 2.17 (MOF) 2. Subsidies on imported grain, cotton, etc. 8.85 (MOF) /a Of which: Grain /b 5.92 Other %residual) 2.93 3. Subsidies to cover the difference between procurement and sales prices of domestically produced commodities: 21.75 (MOF) Of which: Grain, cotton, edible oil: 16.26 /c Of which: Crain 12.21 /d Ediblc oil 2.76 Th - Cotton 1.29 Tesidual) Nonstaple foodstuffs 2.80 /e Coal .1.00 7T Other 1.70 Tresidual) II. Housing Subsidies Y 4.95 billion t Of which: Paid by state budget 1.30 /h Paid by enterprises 3.70 T?esidual) III. Nonprice Subsidies to Money-losing Enterprises 10.20 /i Of which: Industrial enterprises 4.20 /; Commercial and other 6.00 (residual) IV. Total (rounding 4.95 to 5.0 and 32.77 to 32.8): 48.00 Of which: Government 44.30 Enterprises 3.70 /a The large size of this subsidy almost certainly means that it is calcula- ted at the internal settlement rate (ISR) of Y 2.8 to US$1. If subsidies were calculated at the official exchange rate, they would be about Y 3.4 billion, of which grain would be about Y 2.3 billion. This assumes that the costs incurred by foreign trade bureaus above and beyond the c.i.f. -.105- Appendix J Page 15 of 21 import cost are all domestic costs, and that the ratio of the subsidy at official rates to that at the ISR is che same for grain and for other agricultural products. If subsidies are calculated at the official exchange rate, there should be an additional separate subsidy added to cover the net losses resulting from the ISR. /b Based on a unit subsidy of Y 400/ton for wheat reported in Jiagexue [Price Studies], (Beijing: Zhongguo Renmin Daxue Chubanshe, 1982), p. 495. 1981 grain imports are from SYC 81, p. 438. (Note: grain import figures on different pages of this source differ). It is assumed that the subsidy rates for other imported grains are the same as that for wheat. The per- ton subsidy figure appears to include costs incurred by foreign trade cor- porations in importing grain. It varies from year to year with the inter- national price of grain. /c Shehui Zhuyi Jiage Wenti [Socialist Price Questions], (Beijing: Zhongguo Caizheng Jingji Chubanshe, 1982), p. 217. /d Based on a figure of Y 0.2/kg subsidy on grain and Y 1.6/kg subsidy on edible oil from Lardy, Nicholas, "Agricultural Prices in China" (World Bank Staff Working Papers, No. 606), p. 37, and retail sales figures in SYC 81, p. 338. /e Lardy, p. 39. /f Assumes that all retail sales of coal are subsidized (SYC 81, p. 344), and that the per-ton subsidy is about Y 7.5. /g Appendix Table A.3. /h Based on the statement that Government financial subsidies for housing totalled Y 3.5 billion in 1979-81 and the assumption that the cost of the subsidy increased by 10% per year in 1980 and 1981. [China Daily, 10/14/82, p. 1]. /i Jiefang Ribao [Liberation Daily], 6/27/83, p. 4. Includes industrial, commercial, and grain enterprises. It is possible that there may be some double counting between this figure and those for price and housing subsidies. /i Rough estimate consistent with figures reported in various Chinese publications. - 106 - Appendix J Page 16 of 21 WORKSHEET E: INCOME FLOWS FOR PIE CHARTS (for Tables 9.6 and 9.7) (Y billion) 1. 1981 GDP at producers' prices 442.03 (Worksheet A) Agricultural incomes 161.63 ( " ") Wages /a 113.00 ( " ) Profits 167.40 (residual) Indirect taxes 60.60 (Worksheet A) Government subsidies 44.30 (Table 9.2) Agricultural tax 4.30 (Appendix Table C.2) Taxes on wages 0.00 Taxes and levies on profits 113.70 (Supplementary Worksheets 1 and 2) After-tax household iscems 270.33 (161.63 + 113.0 - 4.3) After-tax enterprise profits 53.70 (167.4 - 113.7) Government revenue 178.00 (Supplementary Worksheet 1) Household saving 38.00 (Worksheet C) Enterprise saving 29.00 i " ") Government saving 64.70 ( " ") 2. 2000 (QUADRUPLE) GDP at purchasers' prices 1,524.43 (Annex D) GDP at producers' prices lb 1,472 Note: In all of the projections for the year 2000, it is assumed that GDP at producers' prices remains the same. The value of GDP at purchasers' prices then varies with changes in projected indirect taxes and subsidies. Agricultural incomes lc 412 (Annex D) Wages /d 478 ( " ) Profits 582 (residual) Note: Taxes, Governasat revenue and expenditure, and saving by different sectors are based on the assumptions of the different scenarios. 3. 2000 (BALANCE) GDP at purchasers' prices 1,540.96 (Annex D) GDP at producers' prices /b 1,488 ( " ) Agricultural incomes /c 380 ( " ) Wages /d 551 ( " ) Profits 557 (residual) - 107 - Appendix J Page 17 of 21 4. Absolute numbers for Table 9.6 Agricul- Govern- tural Indirect ment Item incomes Wages Profits tax Total subsidies Pie A Amount 161.63 113.0 167.4 60 502.03 44.3 Amount taxed 4.3 0 113.7 60 178.0 - Pie B Amount 412 478 582 200 1,672 /e Amount taxed 11 0 396 200 607 - Pie C Amount 412 478 582 283 1,755 /e Amount taxed 11 0 227 283 521 - Pie D Amount 412 478 582 210 1,682 le Amount taxed 24 70 217 210 521 - Pie E Amount 380 551 557 214 1,702 /e Amount taxed 16 74 208 214 512 - 5. Absolute Numbers for Table 9.7 Household Enterprise Government earnings profits revenue Total Pie Al Income /f 270.33 53.7 178.0 502.03 Saving 38.0 29.0 64.7 131.7 Pie BI Income /f 879 186 607 1,672 Saving 88 44 310 442 g Pie Di Income If 796 365 521 1,682 Saving 80 274 88 442 Pie D2 Income /f 618 543 521 1,682 Saving 62 292 88 442 /g Pie D3 Income /f 796 365 521 1,682 Saving 159 195 88 442 /g - 108 - Appendix J Page 18 of 21 /a Not including bonuses paid from enterprise retained profits (Y 7.2 billion - see Worksheet A). /b This assumes that the ratio of GDP at producers' prices to GDP at purchas- ers' prices as given in the multisectoral model projection is the same as it was in 1981 (0.9657). Jc Wages and profits in agriculture (sectors 1 and 2), plus one-third of total rent. /d Wages in nonagricultural sectors plus one-third of rent. This figure is then adjusted downward by 10.4% (the percentage by which the corresponding figure for 1981 in Annex D exceeds the wage figure derived from the 1981 input-output table (Appendix Table C.2)). /e No absolute figures were calculated. Ratios to GDP were taken from the various scenarios in Table 9.4. If Income after tax derived from the absolute numbers for Table 9.6 above. /g QUADRUPLE projection of domestic saving (SD) in 2000 from Annex D. - 109 - Appendix J Page 19 of 21 Supplementary Worksheet 1: BUDGETARY ACCOUNTS, 1981 1. Revenue Government budget statistics: Y 108.95 billion (SYC 83, p. 445) Less: Revenue from borrowing: -7.31 (SYC 83, p. 446) Plus: Subsidies /a +44.30 (Table 9.2) Total Revenue 145.94 2. Expenditure Government budget statistics 111.50 (SYC 83, p. 445) Less: Expenditures on loan repayments -4.10 (rough estimace) Plus: Subsidies /a +44.30 Total Expenditure 151.70 3. Budget deficit Total Expenditure 151.70 Less: Total Revenue -145.94 Budget Deficit 5.76 4. Capital expenditure Capital construction 33.06 (SYC 83, p. 448) Technical renovation and new product development 6.53 '( ) Circulating capital 2.28 ( ) Subtotal 41.87 Education, culture, science, and public health lb 1.71 ( " ) Agriculture /c 1.52 C ) Total Capital Expenditure 45.10 5. Subsidies and transfers Subsidies 44.30 (Table 9.2) Plus: Transfers +3.00 /d Total Subsidies and Transfers 47.30 -110- Appendix J Page 20 of 21 6. Public consumption and current expenditure TotaL Expenditure 151.70 Less: Capital expenditure -45.10 Current expenditure 106.60 Less: Subsidies and transfers -47.30 Public consumption 59.30 7. Budgetary saving TotaL Revenue 145.94 Less: Current expenditure -106.60 (public consumption and subsidies and transfers) Saving 39.34 8. Composition of revenue Total Revenue 145.94 Less: Indirect taxes -55.40 Less: AgricuLtural tax -2.80 (SYC 83, p. 446) Profit taxes and remittances 87.74 /a These are added to both the revenue and the expenditure sides of the accounts, on the assumption that if there were no subsidies (and no com- pensating wage increases for the elimination of subsidies) the extra enterprise profits would all be taxed and become part of budget revenue. /b Investment expenditures assumed to be 10% of these categories in the state budget. /c This assumes that all expenditure on opening up new land and agricultural mechanization is investment expenditures, all commune support is current expenditure, and 12X of other expenditures on agriculture is capital expenditure. The breakdown of budget expenditure on agriculture is from MOF. /d This is a very rough estimate, based on spending of Y 2 billion on pensions and other benefits for Government employees and Y I billion on disaster relief. - 11l - Appendix J Page 21 of 21 Supplementary Worksheet 2: GOVERNMENT EXTRABUDCETARY ACCOUNTS, 1981 Note: It is assumed that Government extrabudgetary accounts are in balance, that is total revenues equal total expenditures and saving equals investment. 1. Expenditure Saving-investment Y 25.36 million (Worksheet C) Public consumption 6.00 Transfers 0.70 (rough estimate) Total Expenditures 32.06 2. Revenue Total Revenue 32.06 (by assumption of balance) Less: Indirect tax /a -4.60 Less: Taxes on agriculture /b -1.50 Equals: Levies on enterprise profits 25.96 /a This is a rough estimate. In 1982 extrabudgetary revenues of Government finance departments were reported to be Y 4.1 billion and those of nonpro- fit agencies and administrative organizations Y 6.3 billion. However, the bulk of the latter probably consisted of fees rather than indirect taxes. /b Difference between total agricultural taxes in Appendix Table C.2 (Y 4.3 billion) and agricultural tax that is part of state budget revenue (Y 2.8 billion - see Supplementary Worksheet 1).