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How to use data to analyze economic growth before and after reform

The economic growth rate before and after the reform has been used by people. The 60th anniversary of the founding of the country 10 years ago is a climax. This year, many people use data to express their ideas and cause controversy. The poor roads have been engaged in a series of economic operations research, and some of the principles of data application, here for everyone to exchange.

There are several indicators that show economic growth. The current popular indicator is GDP (gross domestic product). GDP is divided into current price and constant price. The current price is the GDP calculated from the current year’s price. The constant price is based on the price of a certain year. After deducting the price change factor, the actual GDP in other years is calculated (for example, 1979 with the constant price of 1952). Annual GDP). In addition, the commonly used “GDP index”, the index indicators are calculated at constant prices, said that in 1979 GDP increased by 7% over the previous year, using the above year as the benchmark constant price.

There are also many questions about GDP as a statistical indicator. China began to use it after 1985, and previously used the “Growth of Industry and Agriculture”. The most important difference between the two indicators is that the latter only counts the increased material wealth and does not count the so-called “value added” of the service industry (sales-purchase). Use GDP as an indicator to generate “added value” as long as a transaction occurs, such as prostitution. The most questionable question is that the GDP before 1985 was later calculated by the National Bureau of Statistics. Is the calculation result affected by the “crash edge” logic? Not sure.

What is the current GDP used for? Current-price GDP is generally used to compare with the total economic output of other countries. Due to the different currency values ​​of different countries, the current GDP should be converted into US dollars at the exchange rate before the comparison. More accurate is to convert the GDP of the country into the “international yuan” calculated by the relevant UN agencies according to the prices of goods, assets and services of various countries, also called the GDP calculated by the purchasing power evaluation method. After converting to US dollars or international dollars, you can compare the economies of different countries.

Can current GDP be used to analyze domestic economic growth? No, because the current price of GDP does not take into account price changes. The prices of capital and consumer goods are changing every year (in most cases, they are rising). It’s like you are drinking in 1 kg of 54-degree old white dry wine. The wine that you put in is 54 degrees or 42 degrees. It feels different when you drink it. If you exchange 6 kg of beer at 4 degrees, it is hard to say that it is not a liquor.

Some days ago, someone used the current GDP to make a map of China’s GDP from 1952 to 2018. This figure can only be used to show that China’s GDP has changed from a very backward position in the world to a second in the world. But he said that “1979 is a turning point”, saying that since then the economic growth has suddenly accelerated, and this has some problems. See Figure 1 (yearbook data for poor roads, there should be little difference):

The figure does show that 1979 was a “turning point”. Before that, GDP was basically a horizontal line, and then it rose rapidly, which is an exponential curve. The data for the graph should be accurate. Since the turning point is said, it means the speed of development before and after the inflection point (1952-1978 and 1979-2018). The data shows that the current average price of GDP in the 26 years from 1952 to 1978 increased by 6.7% annually, while the average annual growth of 14 years in 1978-2018 was 14.7%. The latter has more than doubled the growth rate of the former! The current GDP in 2018 is 245 times that of 1978! The average annual growth rate of 6.7% in China’s economy before the reform is not slow, but it is too poor to be more than double the growth rate after the reform. It is not a growth! However, looking at the picture below is not the same. See Figure.

In Figure 2, the dotted line is the historical GDP calculated at the constant price of 1952. In 2018, GDP is not 90 trillion yuan but 12.8 trillion yuan. It is not 245 times but 35 times more than 1978. The average annual growth rate from 1978 to 2018 was 9.2% instead of 14.7%, which was 37.3% higher than the average annual growth rate of 6.7% in 1952-1978 instead of the staggering 119%. If you take it seriously, it will be a bit strange to describe the economic development of the 70th anniversary of the founding of the People’s Republic of China. In 1949, China’s total GDP was 35.8 billion yuan, and the average annual growth rate of 1949-1978 was 8.1% in 29 years. In this way, the reform is only 13.6% higher than the pre-reform growth rate. Seeing such a curve, the audience will not be surprised. Reducing GDP from 90 trillion to 12.8 trillion is only one-seventh of the original. This is the same as 1 kg of old white dry with 6 kg of 4 degree beer!

A country’s own economic development data before and after comparison, can only be calculated with constant price or index, can not be calculated with absolute value, this is the basic reason for statistical analysis!

Then, the GDP calculated at the current price has little difference from the constant price before the reform, and basically coincides. After the reform, it is riding a dust, and it is getting farther away from the constant price GDP. It is generally believed that the price of the planned economy is controlled before the reform. After the reform, the price is not controlled, and it rises too fast. This view has some truth.

Figure 3 shows that China’s two GDP curves, the current price and the constant price before the reform, are intertwined and intertwined. In many years, even the current GDP is lower than the constant GDP (meaning the price falls). After 26 years of change, by 1978, the current price of GDP was only 6% higher than the constant price. In 2018, the current price of GDP is even higher than the constant price of 605% in 1952! It is worth noting that the current price of GDP has not been faster than the constant GDP. In the years before the reform, it was not obvious that everyone felt that prices were soaring around 1988. The real opening is the end of the last century, the most obvious “turning point” is 2005. From then on, the constant price and current price GDP are simply two cars running. See Figure.

The reality is that the price increase of consumer goods is limited to the GPD water injection. The chart below shows that the CPI rose significantly from 1984 to 1997. In 1995, it reached a maximum of 24.8%, and in 1997 it fell to 2.8%. Since then, there has been almost no increase of more than 5%. At the turn of the century, there are four years of CPI or negative.

This is somewhat confusing: the reason why the current price of GDP is higher than the constant price is caused by rising prices. The same thing is more expensive than last year, and naturally it has increased GDP. Why is the price deviating from the constant price when the price rises fast? When the price does not rise, or even the negative value, the current GDP is not only inflated, but also greater? For example, in 2002, CP1 fell by nearly 1 percentage point from the previous year. The current price of GDP has increased by 13 percentage points over the constant price. Where does the inflated part come from?

In economic statistics, the so-called consumer goods refers to the daily consumer goods of residents, including consumables and durable goods, even cars, but not including houses. The house is a fixed asset. The price of fixed assets is only deducted on an annual basis, excluding value added. However, a real estate company sells the same house. If the price sold in the second year is 10% higher than the first year, it is converted when the price is constant. Why is the same house going up? Real estate agents say the cost has risen. What is the fastest rising real estate cost?

Everyone knows that it is the price of land. In the early 1990s, the poor road was responsible for the merger of a private company. At that time, it merged with a medium-sized state-owned enterprise in the center of the city, and the acre was only calculated at 30,000 yuan. Such a plot will be around 5 million in 10 years, and now 10 million can’t be bought. Real estate was allowed to operate in the early 1990s, but the real large amount of land was developed after 1998. In 1998, the state announced the abolition of the housing system, and housing relied on the market.

At the same time, during this period, various regions began to engage in large-scale development zones. Local governments used low-cost peasants to collectively use land for various development zones. The prices that developers (then mainly manufacturing) bought were high. Like Zhengzhou before and after 98, even if the concessions, an acre of land should be 200,000-300,000. Due to the large amount of capital construction during this period, the supply of land has grown at a high rate every year, and at the same time, prices have risen, and the added value of capital construction and real estate has been increasing. Start hundreds of billions a year, and then trillions a year thereafter. See Figure 6:

Some people will not think about it: the added value is the sale of the purchase, the land is expensive, and the sale is expensive. How can it be inflated? The reason is that the unit of calculating GDP is not just a business unit, but the government is also included. There is a big gap between the government-developed resettlement fees and the money sold to developers. The land of 30,000 yuan and one mu is sold at 300,000 mu, with an additional value of 270,000. This value, even if it is recognized by the market, is added. Moreover, the bank must issue additional currency to maintain its operation, and the current total economic volume has also increased this number. But for statistics, the price of the same house last year and this year cannot be changed. This began in 1998, although the CPI price has not risen since then, but the current price of GDP has risen more crazy. Also note that after the housing price rises, second-hand housing sales are also creating water-injected GDP. The 200,000-buy house sold for 1 million, and the value-added was 800,000. The room was still the room, and the GDP doubled.

The poor road feels that the data is not unimportant, it is not impossible to explain the problem. On the contrary, it is best to use data when it comes to clarifying economic issues. But the use of statistical data is well-regulated. The experience of the poor roads over the years is that it is easier to use statistic data to say swear words than to tell the truth. The reason is that most people who eat melons are unclear about the caliber, source and application of the data. Even the same data is represented by different graphs, and the feeling given is different.

A few days ago, some people in the group published an article saying that the air quality of Beijing-Guangzhou is far worse than that of Yunnan, but the life expectancy is much higher. It is still in a big city. This conclusion is drawn to illustrate the author’s meaning of “life expectancy per person”.

There is no statistically “per capita life”, only the “life expectancy of a certain age”. The term “lifetime per capita” as used by the average person usually refers to the indicator of “life expectancy at birth”. Life expectancy is also the life expectancy of a 30-year-old population. Life expectancy at a certain age is calculated using a population (national, provincial, or other) weighted average of the number of deaths from each age group up to the maximum age of death.

If you choose the birth year as the starting point, then those who are born and died should be filled with the survival time of many other seniors, so it is very different to die from one baby and one old man. Infant mortality and infant and child mortality tend to be high (up to 30% before liberation), so infant and child mortality has a significant impact on the value of “birth life expectancy”. Infant and child mortality rates are high in large cities and are often half as low as the underdeveloped Southwestern and Northwestern provinces. This has led to a low “life expectancy at birth” in big cities. In areas with low birth expectancy, the life expectancy at 49 is not necessarily low. You are 40 years old and want to use your local “40-year life expectancy” and cloud-to-high ratio. The high age group is often a place with a good life and a good air.

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