Global Purchasing Power Parities and Real Expenditures - Afristat

Appendix EEstimating Average Pricesfor Household ConsumptionItems of ChinaIn China, ICP price surveys, conducted by the NationalBureau of Statistics of China (NBS), for household consumptionitems covered the 11 municipalities of Beijing,Shanghai, Ningbo, Qingdao, Guangzhou, Xiamen, Dalian,Harbin, Wuhan, Chongqing, and Xi’an. Data were collectedfrom outlets in both the cities proper and surroundingareas. However, the computation of purchasing powerparity (PPP) data requires both average prices and GDPweights at the national level. The Asian Development Bank(ADB) convened an expert group 8 on June 19–20, 2006,to develop a procedure for extrapolating the data from the11 municipalities to the national level. The expert groupagreed on the following steps:m Average prices for each of the 11 cities proper and,separately, the surrounding areas were computed atthe product level by NBS and submitted to ADB.However, the national annual average prices are notofficial estimates of the NBS, but were computed bythe ADB and the World Bank.m Per capita household expenditures by nine expenditurecategories 9 were derived from China urban andrural household income and expenditure surveys,and population data for urban and rural areas for all31 provinces of China were taken from the ChinaStatistical Yearbook (2007).m A principal-components analysis of urban and ruralper capita household expenditure structures of themmmm31 provinces in China was used to group them intofour analytical clusters: Capitals, Coastal, Northeast,and Inner China. Each of the 11 municipalities isincluded in only one of the four analytical clusters.Weights for the eight expenditure categories fromeach of the urban and rural areas of the 31 provinceswere allocated to the corresponding average pricedata collected from the 11 municipalities within thefour analytical clusters.Using these weights, the average prices were estimatedfor each household consumption item. PPPsfor the basic headings in household consumptionwere calculated using these average prices.For government consumption expenditure, NBSalso provided data on compensation of governmentemployees for the 11 cities. However, because theChina Statistical Yearbook had national-level figuresfor government compensation, these figures wereused in estimating PPPs for both individual and collectiveconsumption.For gross fixed capital formation, prices for constructiongoods were collected for three cities only, andthose for machinery and equipment were collectedin 11 cities in which the type of equipment could befound that matched the specifications. This is consistentwith methodology used in other economies andregions; thus, no extrapolation was required.181