Explanatory Notes on Main Statistical Indicators

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

In industrial statistics surveys, the units of enquiry are corporate industrial enterprises with independent accounting systems.

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

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

State-owned and State-holding Enterprises refer to state-owned enterprises plus State-holding enterprises. State-owned enterprises (originally known as State-run enterprises with ownership by the whole society) are non-corporate economic entities registered in accordance with the Regulation of the People＊s Republic of China on the Management of Registration of Legal Enterprises, where all assets are owned by the State. Included in this category are State-owned enterprises, State-funded corporations and State-owned joint-operation enterprises. Joint State-private industries and private industries, which existed before 1957, were transformed into state-run industries since 1957, and into State-owned industries after 1992. Statistics on those enterprises are included in the State-owned industries instead of being grouped them separately. State-holding enterprises are a sub-classification of enterprises with mixed ownership, referring to enterprises where the percentage of State assets (or shares by the State) is larger than any other single share holder of the same enterprise. This sub-classification illustrates the control of the State over a particular industry.

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

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

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

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

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

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

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

Limited liability corporations include state sole funded corporations and other limited liability corporations.

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

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

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

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

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

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

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

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

(2) Industrial intermediate input: refers to purchased goods and paid services consumed during the industrial production of enterprises. Fees paid for services include fees paid for the services provided by material production sectors (industry, agriculture, wholesale and retail trade, construction, transport, post and telecommunications) and by non-material production sectors (insurance, banking, culture, education, scientific research, health and medical care, public administration, etc.). The determination of industrial intermediate input follows the principle that the goods and services must be purchased from outside and included in the gross industrial output, and that the goods and services are inputted into production and consumed (include low-value consumables) during the reference period.

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

Total Assets refer to all economic resources, in monetary term, these are owned or controlled by enterprises, including properties, creditor＊s equity and other economic rights of all forms. Classified by the degree of liquidity, total assets include working capitals, long-term investment, fixed assets, intangible assets, deferred assets and other assets. Data on this indicator can be obtained by the year-end figures of total assets in the Assets and Liability Table of accounting records of enterprises.

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

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

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

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

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

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

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

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

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

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

Cost of Principal Business refers to the annual accumulation of the corresponding item in the ※profit table§ of the accountant. For enterprises that do not follow the 2001 Enterprise Accounting Standards, the year-end accumulation of cost for the sales of products is used as a substitute.

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

Total Profits refer to the final achievement of production and operation activities of the enterprises, represented by total profits after deducting losses (loss is expressed by the negative figure). It is the sum of profits from operation, income from subsidies, investment earnings, net income from activities other than operation, and adjustment of profits and losses of previous years.

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

Average Annual Number of Employed Persons Employed persons refer to all those who are employed in enterprises and receive remunerations there from, including currently working employees, retirees who are re-employed, teachers of local-run schools, as well as foreigners, staff from Hong Kong, Macao and Taiwan, part-time employees and persons with second job who are employed by the enterprise, and employees of other units temporarily working in the enterprises, but excluding former employees who left the enterprise with their employment records still being kept by the enterprises.

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

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

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

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

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

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

In the above formula, average balance of total working capital refers to the arithmetic mean of the sum of working capital at the beginning and at the end of the reference period.

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

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

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