The real case in the World and

China － HOTWORDS
•全面协调可持续发展
•All-round, Coordinated and Sustainable Development
•振兴老工业基地
•Revitalize Old Industrial Bases
•农民工
•Farmers-Turned-Construction-Workers
•三农
•Farmers, Rural Areas, Agriculture Production
•宏观调控
•Macro Control
•稳健 ( 积极 ) 的财政和货币政策
•Prudent (proactive) fiscal and monetary policy
•和谐的 社会主义社会
•harmonious socialist society
•NPC- National People's Congress 全国人民代表大会 [ 中国 ]
•CPPCC-- Chinese People‘s Political Consultative Conference 中国人民政治协商
会议
 What is one way to
compare the well-being of
one country to another?
GDP per capita
 Production and Gross
Domestic Product
•GDP: A Definition
•The Expenditure Approach to GDP
•Other Approaches to GDP
•Measuring GDP: A Summary
•Real Versus Nominal GDP
•How GDP Is Used
•Problems with GDP
 An Overview of National Income
and Product Accounting
• Detailed calculations were first worked out
by Simon Kuznets during the Great
Depression
• Large quantities of data collected and
organized from a variety of sources around
the country
• These data are summarized, assembled
into a coherent framework, and reported
by the government
 Gross Domestic Product
Gross Domestic Product (GDP)
The total value of all final goods
and services produced for the
marketplace during a given
The key part of national
year ,
within the nation’s borders
income account
The key part of national income account
 Production and Gross Domestic
Product, GDP: A Definition
• The total value
– Approach of GDP is to add up dollar value
of every good or service—the number of
dollars each product is sold for
• However, using the dollar prices at which
goods and services actually sell also creates a
problem
– If prices rise, then GDP will rise, even if we are not
actually producing more
– GDP must be adjusted to take away the effects of
inflation
 Production and Gross Domestic
Product, GDP: A Definition
• …of all final…
– When measuring production, we do not
count every good or service produced in the
economy
• Only those that are sold to their final users
• Avoids over-counting intermediate products
when measuring GDP
– Value of all intermediate products is automatically
included in value of final products they are used to
create
 Gross Domestic Product

Intermediate Goods: Goods used up in

producing final goods
Final Good: A good sold to its final user
but…sometimes, it is difficult to distinguish these
two things, e.g. Coal-heating-FG; Coal-to generate
power-IG,so we use …
value-added approach to avoid double-counting
 Stages of Production

$5.00
(Notebook
$3.50 Paper)
(Notebook
$2.25 Paper)
$1.50 (Notebook
$1.00 (Raw Paper) Paper)
(Wood Chips)

Lumber Paper Office Supplies Wholesaler Retailer

Mill Mill Manufacturer
2 Value Added at Different Stages of Production

Cost of
Firm Interm ediate G oods Revenue Value Added

Lum ber C om pany $ 0 $1.00 $1.00

P aper M ill $1.00 $1.50 $0.50
O ffice S upplies M anufacturer $1.50 $2.25 $0.75
W holesaler $2.25 $3.50 $1.25
R etailer $3.50 $5.00 $1.55
Total: $5.00
 Production and Gross Domestic
Product, GDP: A Definition
• …goods and services…
– We all know a good when we see one
– Final services count in GDP in the same way
as final goods
• …produced…
– In order to contribute to GDP, something
must be produced
• During the period being considered
 Production and Gross Domestic
Product, GDP: A Definition

• …for the marketplace…

– GDP does not include all final
goods and services produced in the
economy
• Includes only the ones produced for
the marketplace—that is, with the
intention of being sold
 Production and Gross Domestic
Product, GDP: A Definition
• …during a given period…
– GDP measures production during some specific
period of time
• Only goods produced during that period are
counted
• GDP is actually measured for each quarter, and
then reported as an annual rate for the quarter
• Once fourth quarter figures are in, government also
reports official GDP figure for entire year(p461)
 Production and Gross Domestic
Product, GDP: A Definition
• …within the nation’s borders
– GDP measures output produced
within a nation’s borders
• Regardless of whether it was
produced by its citizens
– citizens abroad are not counted
– However, foreigners producing goods or
services within the country are
 Gross Domestic Product
Flow Variable （流量）
A measure of a process that takes place
over a period of time (income.. )
Stock Variable （存量）
A measure of an amount that exists at a
moment in time (wealth..)
Is GDP a flow or stock variable? Why?
 Expenditure (Final Product)
Approach to GDP
Four categories of output:
•Consumption: purchased by households
•Private Investment: purchased by business
•Government: purchased by government
agencies (including state and local government)
•Net Exports (NX): purchased by foreigners
 Expenditure Approach to
GDP

Measuring GDP by adding the value of

goods and services purchased by each
type of final user
GDP = C + I + G + NX
 Consumption Spending
Consumption (C)
The part of GDP purchased by
households as final users(over 50%
of GDP)
including durable (TV,Car) and
nondurable (food, clothes) products as
well as services (traveling, education)
 Consumption Spending
•耐用品一般是指使用年限较长、价值较高的
有形产品，通常有多种用途，例如冰箱、电
视机、高档家具等等。耐用品一般需要较多
地采用人员推销，提供较多的售前售后服务
和担保条件。
•非耐用品一般是指有一种或几种消费用途的
低质易耗品，如解渴饮料、食盐、肥皂等。
这类产品消费快，购买频率高
 Consumption Spending
• Consumption is the part of GDP
purchased by households as final users
– Almost everything households buy during the
year is included as part of consumption
spending when we calculate GDP － but not
include land, financial assets and used goods
– One exception is construction of new homes
• Counted as private investment
 Consumption Spending
• Some quirky exceptions to the
definition of consumption
• Total value of all food products that
farm families produce and consume
themselves
• Total value of the housing services
provided by owner-occupied homes
• They are all included in GDP even no
transaction is carried out (imputed)
 Private Investment
Private Investment (I):
1. The sum of business plant and equipment
purchases
2. New home construction
3. Inventory changes
 Private Investment
– Business Purchases of Plant, Equipment,
and Software
• A firm’s plant, equipment, and software
are intended to last for many years—only a
small part of them is used up to make the
current year’s output
• Are regarded as final goods, and firms that
buy them as final users of those goods
 Private Investment

–New Home Construction

• Residential housing is an important
part of nation’s capital stock
• House will continue to provide
services into the future
• Why house is not a IG?
 Inventories
• Refers to stocks of goods in process and stocks
of finished goods
• Help firms deal with unexpected changes in the
supply of their resources or in the demand for
their products
• Net changes in inventories
– Net increase in inventories counts as investment
because it represents current production not used
for current consumption
– Net decrease in inventories counts as negative
investment, or disinvestment, because it represents
the sale of output already credited to a prior year’s
GDP
 Private Investment
1. Changes in Inventories
1. We count the change in firms’ inventories as
part of investment in measuring GDP
2. Why?
1. When goods are produced but not sold during the
year, they end up in some firm’s inventory stocks
2. Part of the nation’s capital stock
3. Will provide services in the future, when they are
finally sold and used
 Private Investment
When measuring private investment
spending, it is important to include
changes in business inventories, in order
to
• adjust GDP for output sold this year that was
produced in previous years,
• adjust GDP for output produced this year but not
sold during the year.
 Private Investment
( inventory changes= current year ’s
final inventory - previous year’s
final inventory)
 Case of Inventory Changes
Case 1: Inventories unchanged over the course of a year
Inventory on January 1 = $500
Total production for the year = $1000
Total sales for the year = $1000
Inventory on December 31 = $500
Change in inventory = $0
Since current expenditures accurately measure
current production, the inventory component of
GDP is $0.
 Case of Inventory Changes
Case 2: Inventories increase over the course of a year
Inventory on January 1 =$500
Total production for the year = $1000
Total sales for the year = $800
Inventory on December 31 = $700
Change in inventory = $ 200
Since current expenditures understate current production, we add
$200 to our measure of GDP (by adding $200 to private investment
spending). In effect, we are saying that the firm “bought” its own
inventory.
 Case of Inventory Changes
Case 3: Inventories fall over the course of a year
Inventory on January 1 = $500
Total production for the year = $1000
Total sales for the year = $1450
Inventory on December 31 = 50
Change in inventory = -450
Since current expenditures overstate current production, we subtract $450
from our measure of GDP (by subtracting $450 from private investment
spending). If we fail to subtract the value of the inventory change then our
measure would include some output that was produced in some past year
but that was not sold until this year.
 Investment

• Excludes Household
– purchases of durable goods
– Purchases of existing buildings and
machines
– Purchases of financial assets
• Stocks and bonds
• Are not investments themselves, rather, they
are simply an indication of ownership
 Private Investment
• Specifically, private investment does not
include
– Government Investment
• An important part of the nation’s capital stock is owned
and operated not by business, but by government—
federal, state, and local
– Consumer durables
• Goods such as furniture, automobiles, washing
machines, and personal computers for home use can be
considered capital goods
– Will continue to provide services for many years
– Human capital
• To measure the increase in capital stock most broadly
we include the additional skills and training acquired by
workforce during the year
 Private Investment
• In addition to excluding some
types of capital formation, private
investment also errs in the other
direction
– Ignores depreciation—the capital
that is used up during the year
 Private Investment
Capital Stock: The total
value of all goods that
will provide useful
services in future years
 Private Investment

• Changes in the nation’s capital

stock are somewhat more
complicated than we are able
to capture with private
investment alone
 Government Purchases
• Purchases by state, local governments and
federal government are included
• Government purchases include
– Goods
• Fighter jets, police cars, school buildings, spy
satellites, etc.
– Services
• Such as those performed by police, legislators,
teachers, soldier, sanitation engineers, judges
 Government Purchases
• Transfer payments represent money
redistributed from one group of citizens
(taxpayers) to another (poor,
unemployed, elderly)
– While transfers are included in government
budgets as outlays they are not purchases of
currently produced goods and services
• Not included in government purchases or in
GDP
 Net Exports
• Once we recognize dealings with the rest of the
world, we must correct an inaccuracy in our
measure of GDP
– Deduct all U.S. imports during the year, leaving us
with just output produced in United States
• To properly account for output sold to, and
bought from, foreigners
– Must include net exports—difference between
exports and imports—as part of expenditure in
GDP
1 GDP in 1999: The Expenditure Approach
(Billions of Dollars)

Consumption Private-Investment Government

Purchases Purchases Purchases Net Exports

Services $3,656 Plant and Equipment

$1,166 Government Exports $ 996
Consumption $1,333
Nondurable Goods $1,841New-Home Construction $411 Government Imports $1,253
Investment $ 296
Durable Goods $ 758 Changes in Business
Inventories $ 44
Consumption = $6,255 Private Investment = $1,621 Government Net Exports =-257
Purchases = $1,629

= $6,255 + $1,621 + $1,629 + (-257)

= $9,248

Source:
Economic Report of the President, 2000 (average of 1999 second and third quarter annual rates).
 Other Approaches to GDP
Value-Added Approach
Measuring GDP by summing the value
added by all firms in the economy

Value Added: The revenue a firm

receives minus the cost of the
intermediate goods it buys.
 Other Approaches to GDP

Value-Added Approach
In any year, the value added by a
firm is equal to the total factor
payments made by that firm.
 Other Approaches to GDP
Factor Payments(Income) Approach
Measuring GDP by summing the factor
payments made by all firms in the
economy

Factor Payments: Payments to the owners of

resources that are used in production
 Other Approaches to GDP

Factor Payments Approach

GDP - the total output of the
economy - is equal to the total
income earned in the economy.
 Measuring GDP
Expenditure Approach: C + I + G + NX
Value-Added Approach: Sum of value
added by all firms
Factor Payments Approach: Sum of
factor payments by all firms = Wages
and salaries + interest + rent + profit =
Total household income
 Australian GDP: product-based measure, 2001/02 ($bn)

Agriculture 25
Mining 34
Manufacturing 76
Electricity, gas, water 16
Construction 40
Wholesale trade 37
Retail trade 36
Accommodation, cafes, etc. 15
Transport and storage 34
Communication services 20
Finance and insurance 50
Property and business services 75
Government administration and defence 28
Education 32
Health and community services 41
Cultural and recreational services 12
Personal and other services 16
Ownership of dwellings 62
Gross value added at basic prices 649
Indirect taxes less subsidies 63
Statistical discrepancy 1
Gross Domestic Product 713
Australian GDP: income-based measure,
2001/02 ($bn)
Compensation of employees 338
Gross operating surplus:
non-financial corporations 126
financial corporations 21
general government 13
dwellings owned by persons 58
Gross mixed incomes 68
Total factor income 624
Taxes on products and imports
less subsidies 88
Statistical discrepancies 1
Gross Domestic Product 632
Sloman, Norris: Principles of Economics © 2004 Pearson Education Australia
 Australian GDP: expenditure-based
measure, 2001/02
Final consumption expenditure
Households 427
General government 128
Gross fixed capital formation
Private 132
Public 27
Changes in inventories 1
Gross national expenditure 715
Exports less imports -2
Gross Domestic Product 713

Sloman, Norris: Principles of Economics © 2004 Pearson Education Australia

 Expenditure (Final Product)
Approach to GDP in China
3 categories of output:
•Consumption: purchased by households &
government(60-65%) 消费
•Capital Formation( Investment): fixed
assets & inventory(25%) 资本形成
•Net Exports (NX): purchased by foreigners
(3-5%) 净出口
 Other Approaches to GDP
Factor Payments Approach in China
•劳动者报酬：货币工资、实物工资和社会保险
•生产税净额：生产税费减去生产补贴的差额
•固定资产折旧：弥补固定资产损耗而提取的价值
•营业盈余：主要指企业的营业利润

•方法：投入产出表（ input-output table)

 Other Approaches to GDP
Sector Approach ( 部门法） in China
•1 、农业 2 、采掘业 3 、食品制造 4 、
纺织缝纫及皮革制造 5 、其他制造业 6 、
电力 7 、炼焦 8 、煤气 9 、化工 10 、公
共事业及居民服务 11 、金属产品 12 、机
械制造 13 、建筑 14 、运输邮电 15 、商
业饮食 16 、建材及非金属制造 17 、金融
保险 18 、其他服务业
 Real vs. Nominal GDP
Nominal Variable
A variable measured without adjustment
for the dollar’s changing value
Real Variable
A variable adjusted for changes in the
dollar’s changing value
 GDP Price Index
• The GDP price index measures the average level
of prices of all goods and services included in
GDP
• GDP price index = (nominal GDP / real GDP) x
100
– Nominal GDP is the dollar value of this year’s GDP
measured in this-year prices
– Real GDP is the dollar value of this year’s GDP
measured in base year prices
• If we know both nominal GDP and real GDP,
then finding the GDP price index is easy
 GDP Price Index
• Any measure of real GDP is constructed
as the weighted sum of thousands of
different goods and services
• The question is what weights, or prices,
to use
– Between World War II and 1995, the Bureau
of Economic Analysis used prices of a
particular base year, most recently, 1997, to
estimate real GDP
– In this case, the quantity of each output in a
particular year was valued by using the 1997
price of each output
 Exercise 1
1. 1986 is the base year (price index equals
100), and by 1995 the price index has
reached 200. Nominal GDP of $6.2
trillion in 1995 is equal to what real GDP
in 1986 dollars?
a. $3.1 trillion
b. $6.2 trillion
c. $12.4 trillion
d. $24.3 trillion

A. $6.2 / 200 = .031 x 100 = $3.1 trillion

 Exercise 2
2. 1995 is the base year (price index equals
100), and by 1997 the price index is equal
to 75. Nominal GDP in 1997 of $6.0
trillion would be equal to how much in
terms of 1995 dollars?
a. $4.5 trillion
b. $6.0 trillion
c. $8.0 trillion
d. $12.0 trillion

C. $6.0 trillion / 75 = 0.08 x 100 = $8.0

trillion.
4 Actual and Potential Real GDP, 1960–1999

Actual and 9,000

Potential Real
GDP (Billions of 8,000
1996 Dollars)
7,000

6,000

5,000

4,000

3,000

2,000

1960 1965 1970 1975 1980 1985 1990 1995 1999

Year
 How GDP is Used
1. In the short run, GDP alerts us to
recessions and gives us a chance to
stabilize the economy
2. In the long run, GDP tells us
whether our economy is growing fast
enough to raise output per capita and
our standard of living, and fast enough
to generate sufficient jobs for a growing
population
 Limitations of National Income
Accounting
• Household production is ignored
– “DIY”Child care, household laundry, leaf raking, etc.
• Transactions are ignored where no
records are maintained
– The “underground” economy (Federal
( study suggests the
equivalent of 7.5% of GDP or about $750 billion in 2001)

• GDP ignores leisure, quality, and variety

• Externalities are ignored ( G-GDP)
 Limitations
• For some economic activity, income
must be imputed, or estimated, because
market exchange does not occur
– Imputed rental income that homeowners
receive from home ownership
– Imputed dollar amount for wages paid in
kind, such as employers’ payments for
employees’ medical insurance
– Imputed dollar amount for food produced
by farm families for their own
consumption
 Leisure, Quality and Variety

• The quality and variety of products

available have on average also
improved over the years because of
technological advances and
competition

• GDP does not reflect these

improvements
 GDP Ignores Depreciation
• In the process of producing GDP, some
capital wears out or becomes obsolete

• A truer picture of the net production that

actually occurs during a year is found by
subtracting this depreciation from GDP

• Depreciation measures the value of the

capital stock that is used up or becomes
obsolete in the production process
 Short-Term Changes
Short-term changes in real GDP are
fairly accurate reflections of the state of
the economy.
A significant short-term drop in real
GDP virtually always indicates a
decrease in production, rather than a
measurement problem.
 厉有为提出现代化七原则
•以人为本
•以城市为主体、兼顾农村
•指标体系的全面性和协调性
•指标体系中的主要指标的国际通用性和地区之间的可比性
•指标体系的时代特征
•指标体系的科学化
•指标体系的阶段性
•通用现代化指标体系：英格尔斯指标体系：主要以 GDP 总产值
、农业总产值和服务业占 GDP 的比重、非农劳动力占总劳动力的
比重、识字人口比重、适龄中大学生比重、每名医生服务的人数
、人口自然增长率、平均指标等 10 项指标来衡量现代化
•http://business.sohu.com/2004/03/03/29/article219272917.shtml
 Formula of Happiness
Happiness= P + (5xE)+(3xH)
P-personality:views,adaptability
E-existence:health,finance,friends
H-self-esteem,expectation,humor
Know how to live...
《 GDP 先生的讲述》：
http://business.sohu.com/2003/12/02/97/article216369772.shtml
 The real case in the World and China
•Article 1: 中国面临的五大挑战（胡鞍钢） 2003/12/02
•http://business.sohu.com/2003/12/02/67/article216366703.shtml
•Article 2: 中国对片面追求 GDP 说不 2004/03/04/
•中国对片面追求GDP增长说不 发展目标以人为本.doc
•Article 3: 循环经济－ 2005/03/01
•2004年中央经济工作会议提出大力发展循环经济.doc
•Article 4: 中科院报告认为绿色 GDP 目前在中国不具可行性 2006/03/02
•中科院报告认为绿色GDP目前在中国不具可行性.doc
•Article 5: 发改委： 2010 年人均 GDP 将超 2400 美元 20060306
•马凯：到2010年“老百姓的钱袋子会更鼓一些”.doc
 The real case in the World and
China
•面对经济发展中如影随形的高消耗、高污染和资源环境约束问题，
中国开始寻求经济增长模式的全面转变，走节约型发展道路。
•循环经济是一种以资源的高效利用和循环利用为核心，以“减量化
、再利用、 资源化”为原则，以低消耗、低排放、高效率为基本
特征，符合可持续发展理念的经济增长模式，是对“大量生产、大
量消费、大量废弃”的传统增长模式的根本变革。
•2004 年中央经济工作会议提出大力发展循环经济。这说明，缓解
我国资源全面紧张的状况刻不容缓；同时，如同 " 知识经济 " 一样
， " 循环经济 " 已经融入中国主流经济概念当中，将对中国未来经
济发展产生深远的影响
 The real case in the World and
China － HOTWORDS
•全面协调可持续发展
•All-round, Coordinated and Sustainable Development
•振兴老工业基地
•Revitalize Old Industrial Bases
•农民工
•Farmers-Turned-Construction-Workers
•三农
•Farmers, Rural Areas, Agriculture Production
•宏观调控
•Macro Control
•稳健 ( 积极 ) 的财政和货币政策
•Prudent (proactive) fiscal and monetary policy
•和谐的 社会主义社会
•harmonious socialist society
•NPC- National People's Congress 全国人民代表大会 [ 中国 ]
•CPPCC-- Chinese People‘s Political Consultative Conference 中国人民政治协商
会议
 The real case in the World and
China － some terms
•Circular Economy-- interlinked manufacturing
and service sector businesses seek the enhancement
of the economy and environment by collaborating
in the management of environmental and resource
issues.
 The real case in the World and
China － some terms
•Over the past 25 years, China has enjoyed an
average annual growth rate of 8.7 per cent. With
this rapid economic growth, materials and energy
consumption per unit gross domestic product
(GDP) in China has been far higher than that of
developed nations.
•朱训先生按汇率 GDP 比较的结果是：中国 1 亿美元 GDP 所消耗的能源是 12.03 万吨标准煤，约是日本 1 亿美元
GDP 所消耗能源的 7.20 倍、德国的 5.62 倍、美国的 3.52 倍、印度的 1.18 倍、世界平均水平的 3.28 倍
 The real case in the World and
China
从国内生产总值到国民幸福总值
秦 朔
•2003 年，中国的 GDP( 国内生产总值 ) 达到 116694
亿元人民币，按美元汇率计算，中国人均 GDP 突破 1000
美元，达到 1090 美元。
•如果按照世界银行 1999 年提出的标准 ( 中低收入国家
人均 GDP 在 756 至 2995 美元之间，中高收入国家人均
GDP 在 2996 至 9265 美元，高收入国家人均 GDP 在
9266 美元以上 ) ，中国一些发达地区的人均 GDP 水平已
经达到世界中高国家的收入水平。
 The real case in the World and
China
从国内生产总值到国民幸福总值
秦 朔
•在 2003 年，深圳人均 GDP 为 53887 元，相当于 6510
美元；
•广州人均 GDP 为 47900 元，相当于 5787 美元；
•苏州人均 GDP 为 47701 元，相当于 5762 美元；
•上海人均 GDP 为 46717 元，相当于 5643 美元。
•在这些发达地区的一些更为富裕的局部，如它们的经济
开发区，人均 GDP 超过 1 万美元的已经出现。
 The real case in the World and
China
从国内生产总值到国民幸福总值
秦 朔
•过往 20 多年偏重于 GDP 增长速度的发展模式已经显现出一些弊
端
•如城乡之间、地区之间、不同阶层之间的“受益水平”很不平衡
；
•经济与社会发展不够协调，社会保障和公共服务相对滞后；
•经济长期处于高投入、高消耗、高排放、不协调、难循环、低效
益的外延式粗放型增长，受资源和能源的制约越来越大等等。
•正是在此背景下，中央及时提出了“坚持以人为本，实现全面、
The real case in the World and
China
The real case in the World and
China
The real case in the World and
China
The real case in the World and
China
The real case in the World and
China
老教授手举木牌独自上街游行——
抗议中国教育收费“任何学校都
不能以学生为赚钱的对象。没有
哪个国家把学生作为商品和财源
来榨取的。”我们敬佩老年人的
勇气！现在，学校真的成了 **
的机器，大学每年学费是前几年
时好几倍。可是，学生的质量提
高了吗？又有多少人能够不借债
把大学念下来呢？ 那没钱的农
民的后代呢？难道农民的后代永
远就是农民吗？！！！谁也不能
忘了这个…… 。
The real case in the World and
China同在一片天空下这就是那
张在网上广泛流传，引起
了无数争议的照片。我想
，这张照片最大的现实意
义不在于它揭示了社会巨
大的贫富反差，更让人揪
心的还在于－－当这两个
孩子长大之后，我们又该
用什么来保证他们所代表
的两个阶层的和睦相处 ?
The real case in the World and
China
城管走后 , 哭泣的卖红薯老人。
这个在街上卖红薯老人的三轮车
链条被城管人员剪断，前轮钢丝
被城管踩断。城管干完就走了，
他 K 着墙哭泣。好心的路人纷纷
向老人施出援手，大家帮他把钱
收到怀里。 中国人是很好面子的
，这个草民也有面子。他现在不
能要面子了，老泪纵横，必是伤
心到了绝地。因为他得吃饭，他
是个老人，所以他做不了民工，
他也没力气去偷抢，他是个男人
，所以他当不了妓女，卖不了淫
，他也得活呀！！！你不让他卖
东西也许是对的，那你给他指条
活路呀！关注社会最贫困人群的
生计问题，是到了非解决不可的
时侯了。