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China's Wealth: First National Economic Census

"When I first arrived in Beijing, I felt China was already a developed country," was American traveler Bob's first impression of China. But as he found out, first impressions aren't always true. "When I saw western China, I got confused; the economic situation there is completely different from that of the capital. I really wonder what the true state of the Chinese economy is." Bob is not alone.

The Chinese economy has become the subject of much global debate. In 2004, the Chinese central government carried out a national economic census covering Chinese business and industry. Its aim was to collect a comprehensive range of accurate economic data in order to get a clearer picture of the country's economic make-up.

Defining the Wealthy

The Rupert Hoogewerf 2004 China Top 100 Rich List was released on October 13, 2004. In pole position was 35-year-old Huang Guangyu, general manager of Gome Electronics. Huang, with a reported personal fortune of 10.5 billion yuan, disputes his "richest man in China" title: "There are so many wealthy private business owners in China, I can't be the richest."

It is hard to approximate the number of Chinese moneybags. Rupert Hoogewerf investigates personal wealth from three aspects: company profits, the shares the owner has in the company, and price-to-earnings ratio. Company shares alone do not reflect an individual's wealth in China, and Rupert Hoogewerf's list does not include the wealthy people with no invested funds.

"It is hard to distinguish rich from ordinary people," says Wang Wu, a taxi driver. "Many wealthy Chinese people dress casually and drive ordinary cars; few live in luxurious villas." It is true that Chinese people are in general reluctant to flaunt their wealth, and only a decade ago, there were reports of cash hidden away in secret nooks and crannies being eaten by insects. Times have changed; most people acknowledge that the bank is the safest place to keep money, although interest rate fluctuations do sometimes result in currency depreciation. In the 1980s, middle school teacher Shen San had a banked cash portfolio larger than any other teacher in his school. Today, he is one of the poorest of all his colleagues, as unlike them he never made any investments.

On October 28, 2004, the People's Bank of China announced an increase in its deposit interest rate, the first in 9 years. The news had an instant effect on domestic and international financial markets. Yet, despite this increase, Chinese deposits still bear negative interest, as the Chinese government now encourages investment rather than simply putting money in the bank. As a result, more and more Chinese now invest in stocks, real estate, gold, antiques. Many entrepreneurs have emerged.

Getting a Clearer Picture

China's secondary and tertiary industries have boomed over the past two decades, and their share in the national economy is increasing rapidly. In 2003, the added value of the two sectors was about 10 trillion yuan, accounting for 85 percent of China's gross national product. Since this development, large numbers of rural laborers have joined the urban workforce as factory workers and service industry employees. Some have started their own businesses.

The aim of the 2004 national economic census was to get a clearer picture of the development scale, economic structure and economic performance of secondary and tertiary industries. Another objective was to set up a database on these enterprises in order to provide more accurate reference for research and formulation of national economic and social development plans.

According to its guidelines, this economic census encompasses all individuals and enterprises with fixed working sites that are registered in local industrial and commercial departments, regardless of the type of work they do or their working environment. Zhang Shan, a retired worker who runs a small roadside bicycle repair business and earns a modest but stable income, was bemused at his inclusion in the census. In some places, investigative targets include economic activities of any kind, even babysitting.

At the preparation stage in Beijing, more than 50 forms encompassing 2,000 economic indexes were designed relating to eight categories: industry; construction, wholesale and retail, the catering industry, real estate; finance; transportation and telecommunications; tertiary industry, and statistics collection. Investigated contents were later expanded to more than 60 forms of over 2,300 indexes covering broader social spheres such as culture, sports, exhibitions and advertising firms.

The intention of this national economic census is to cover all aspects of society. As self-employed people are widely scattered and engage in all kinds of activities, however, it is difficult to get comprehensive information on them. Sample surveys, therefore, are applied to the production and business situation of the self-employed, the priority being to collect their basic information.

As Chinese are disinclined to disclose wealth, not all reported data is likely to be valid. In such circumstances, the statistics department used special measures to obtain the figures in question. For instance, a private entrepreneur may not be willing to disclose his net income. But if asked to talk about any unreasonable government charges, he will be more than willing to speak his mind. In some cases, receipts are even produced.

"We can't disclose all the methods we used in the census," says Li Qiang, deputy director of the Economic Census Office of the State Council and also its spokesman. "Suffice it to say to ensure the figures we hand over to the Statistics Bureau, who make a comprehensive, balanced evaluation and analysis, are reliable. For example, if an enterprise produces products worth 1 million yuan, they will have four outlets: consumption, investment, export and import, otherwise, they are kept in reserve. Detailed analysis of these figures indicates whether or not a business' reported statistics are valid."

A strange phenomenon occurred in China in recent years: the names of several wealthy entrepreneurs suddenly disappeared from China's "rich list." It was rumored that they were unable to give a clear account of the sources of their wealth. This made business managers particularly cagey about finances, which made taking the census even more difficult.

Developed countries of the world carry out economic census every five years. The 2004 China national economic census will follow this example, the next one being slated for December 31, 2008.

(China Today January 8, 2005)

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