The Publication of The Historical National Accounts
of the People's Republic of China, 1952-1995

Masaaki Kuboniwa

The countries being researched by the Asian Historical Statistics Project include the world's most populous country, China, as well as the largest in terms of land mass, Russia (the Russian Far East comprises one third of the country's total area). The ongoing changes in these two giants are almost certain to have a decisive impact on the whole of 21st century Asia. Their political structures and economic growth rates differ greatly, but they share the experience of undergoing the process of transition from a planned to a market economy.

In response to the transformation in economic institutions, both countries are energetically instituting a change in statistical systems from the planned economy-oriented Material Product System (MPS) to the market-oriented System of National Accounts (SNA). The People's Republic of China, which was founded in 1949 and commenced its reforms in 1978, is of course in advance of the Russian Federation, established only at the end of 1991, in making the transition to SNA.

However, an examination of time series tables indicates that even China has so far published its official statistics for gross development product (GDP) and gross domestic expenditure (GDE) only from 1978 on. Thus major obstacles remain to conducting a thorough long-term analysis of the Chinese economy. (The situation is worse yet in Russia, Uzbekistan, and other countries from the former Soviet Union because GDP time series are the only official statistics covering the period after 1989.) Further, while authorities and state statistical offices in developing and transitional countries generally recognize the importance of compiling historical statistics, they tend to adopt a short-sighted approach of committing human and financial resources only to improving current statistics. Russia and China are no exceptions. To be sure, though, just to improve SNA statistics for the present period alone requires a major commitment of time and money.

This task was completed for the time being in the case of China by a joint China-Japan research project conducted over the relatively brief period of eighteen months. The results have just been published in a report, The Historical National Accounts of the People's Republic of China, 1952-1995 (September 1997, Tokyo), edited jointly by The Department of National Accounts of the SSBC and The Institute of Economic Research of Hitotsubashi University. (The SSBC is the State Statistics Bureau of China.) Below, I will briefly describe the project and its significance.

Conscientious statisticians in transition countries want to arrange historical statistics into complete time series tables, but they are caught in a dilemma because adding historical statistics to the agenda would increase their already considerable work load, without bringing any added pay or recognition. (Statisticians in current and former socialist countries have received comprehensive educations in statistics, and many of them truly enjoy statistical work.) Transitional countries are concentrating on business and finance, relegating statistics and historical research to second or third priority, and the treatment of statisticians and researchers is often none too good.

Although we non-Chinese researchers wanted to base a long-term analysis of postwar China on reliable GDP statistics, we faced a dilemma of our own. If we compiled Chinese data, we would likely make an error at the basic data stage, and while it would be possible to estimate real growth rate series from quantitative data, in the case of GDP / GDE series at nominal value, the lack of data means that only simple econometric methods could be used in making the estimates, which would therefore be quite general. Moreover, even the existing GDP statistics for 1978 to the present have barely been used by researchers, so a suitable accumulation of knowledge of the data is lacking.

The Statistics Project created the opportunity for resolving the dilemmas of both sides. The Department of National Accounts managed to persuade higher officials and people in related departments to approve their participation in the project by playing the gaiatsu (Japanese for outside pressure) card, namely, emphasizing the great importance which foreign researchers have placed on reconstructing Chinese historical statistics. The statisticians themselves were stimulated by the outside expectations, which motivated them to undertake the difficult task of compiling past statistics. In addition, there were strong incentives in both Tokyo and Beijing for entering into joint research. For we researchers on the Japanese side, the Statistics Project presented a chance to jointly develop usable raw data compiled through well-tested means, and it would be possible to make the data closely compatible. In addition, it would be possible to access a great deal of previously unavailable MPS data. Finally, we would be able to conduct real-time conversations on revising and improving data series from 1978 to the present.

"Even if the Japanese team doesn't participate, the Department of National Accounts is going to reconstruct and publish GDP / GDE statistics in the near future" or "There is no reason to spend a lot of research funds on joint research" -- such thoughts indicate the suspicions with which our research agenda may well have been viewed. However, there is always considerable uncertainty about "the near future," and it was necessary to estimate not just GDP, but GDE, and the latter required the application of mutual expertise. Moreover, there is no established methodology for estimating past GDP, making international communication in this area essential.

Based on my extensive knowledge of the internal conditions of the statistics bureaus in China and the different republics of the former Soviet Union, I believe that the Chinese would have needed at least several years to complete the process without our participation or that of the World Bank. Moreover, the joint research enabled us to compile time series for the nominal and real values of GDE as well as GDP statistics. The Chinese at first had little interest in compiling time series for GDE (often called expenditure approach GDP in China, Russia, and the former Soviet Union), particularly for real value series. However, we wanted to achieve compatibility in data on production, income, and expenditures, and we emphasized the experience that the Institute of Economic Research had gained in conducting the Long-term Economic Statistics of Japan project in the 1960s and 1970s. Our persistent arguments at last persuaded our Chinese colleagues to join us in developing estimates for GDE. It is standard practice to base estimates of past GDP for transitional countries on the old NMP (net material product) system or national income. In the former concept, the practice of making â┐ positive and â└minus was not uniform; in this case the production approach, income approach, and expenditures approach each employed a different practice. Moreover, when series for real values are extended further into the past, the methods for compilation become more diverse, increasing the complexity of compilation. The Japanese researchers' proposal to make production and expenditures consistent was adopted for the joint project. For compiling series at real values, our basic approach was to make effective use of physical indices when necessary. By using these consistent approaches, we were able to compile complete series at nominal and real values, and avoid many of the inevitable errors which occur in the processes of estimation and calculation. In fact, through a recheck of data compatibility, the Japanese side found errors in estimates of the historical statistical data which had been compiled and tentatively completed at the beginning of August 1997, and we were forced to spend the rest of the month and the first half of September making comprehensive revisions. Revisions on a scale this large could be accomplished only through the joint efforts of the Chinese and Japanese researchers.

An important feature of the project was that the participating organization on the Chinese side was not one of the scientific agencies but the State Statistics Committee. There were two recent joint projects that we kept in mind as models for this project. First, in 1995 Russia's State Statistics Bureau, in cooperation of the World Bank, comprehensively revised its official GDP statistics for 1990-1995, and, second, Keio University's Economic Observatory and the Ministry of International Trade and Industry's Industrial Research Institute worked with China's State Statistics Bureau to compile input-output tables for use in analyzing energy and the environment. In addition, I have been serving as an advisor to Russia on compiling SNA input-output tables. All of these cases would have been unthinkable ten years ago when such data was kept secret. If you work with China's scientific agencies on compiling postwar statistics, the best materials you can expect to access are existing official data or secondary and third-hand materials. Therefore, working with the Department of National Accounts to produce official statistics is optimal. Further, having seen the recent state of statistical work in Russia and China, we felt that conducting joint research would be a good means of bringing a degree of order to the statistics work environment in China. In fact, the successful outcome of our collaboration serves to prove that the time was right for this kind of approach.

All transitional economies are undergoing rapid change, and the same is true of the environment for statistical compilation. Old rigidities and self-centered preconceptions pose obstacles to the continued development of cooperative Chinese-Japanese initiatives. We learned from this project the importance of accurately perceiving new conditions and constructing a framework for progressive work to produce joint estimates.

The joint project was not without problems. Because estimations were based on MPS statistics, the task of fundamentally reworking the estimations using a single, constant price standard was not performed. Therefore, for industrial production and national income, we limited ourselves to the convenient method of linking constant price series for the years 1952, 1957, 1970, 1980, and 1990. There is also plenty of room to improve our estimates of "minus â└" for expenditures series. Finally, we were unable to disclose details on the financial statistical information. Despite these various problems, we realized some important results. We were able to obtain essential data for conducting systematic analysis of the Chinese economy, and the methods we used provided far better estimates than other approaches we might have chosen; scholars will soon recognize the significance of these achievements. It is our hope that many researchers will use the products of our collaborative work, and subject them to further investigation and critical examination.

Hitotsubashi University, Institute of Economic Research