In the first quarter of 2024, the National Bureau of Statistics and the head office of the People's Bank of China adjusted and optimized the accounting methods for the financial industry, and optimized and adjusted the quarterly accounting methods for the value added of the financial industry. The optimized accounting method mainly refers to the bank's profit indicators, including the growth rate of net interest income in operating income, and the growth rate of net fee and commission income.

In 2023 and before, when the value added of the financial industry is accounted for quarterly, its main component, the value added of the monetary financial services industry, is mainly calculated with reference to the year-on-year growth rate of deposit and loan balances.

Therefore, at the beginning of each year, economic data such as GDP are released one after another, and the topic of accounting methods for value added in the financial sector and the possibility of "distorting" GDP growth is a concern.

There are signs that under the pressure of GDP growth and other assessment indicators, due to the high proportion of the financial industry, financial data may be "mixed with water. The deposit and loan growth indicators have a relatively large impact on the added value of the financial industry and the growth rate of GDP. To a certain extent, it has caused various places to scramble for deposit and loan resources at key points in time, and "inflate" deposit and loan data to meet The index requirements of local financial industry value added and GDP growth.

If the added value of the financial industry and its contribution to GDP are "falsely high", it will affect the decision-makers to grasp the real and effective data and information, which is not conducive to the real judgment of the development status of the financial industry, nor is it conducive to the objective judgment of economic recovery and growth. It will also affect the implementation of the strategic policy of financial support for the high-quality development of the real economy.

The Central Financial Work Conference stressed that to promote the high-quality development of China's finance, it is necessary to "optimize the financing structure and increase the proportion of direct financing" and "better play the function of the capital market hub.

In this regard, the optimization and adjustment of the existing financial industry value-added accounting indicators and accounting methods can more scientifically reflect the results of high-quality financial development and truly promote financial support for the high-quality development of the real economy.

The financial industry accounts for a high proportion of GDP, and the tertiary industry contributes the most to GDP

For a long time, my country's financial industry's added value as a percentage of GDP has been far ahead of the world's major economies. According to the "opinions and suggestions on the report on Financial work" published on the official website of the National people's Congress on November 22, 2023, during the deliberation process, some attendees pointed out that the added value of China's financial industry accounted for nearly 8% of GDP, higher than the average proportion of 4.8 of the member states of the Organization for Economic Cooperation and Development, and higher than the average proportion of 3.8 of the member states of the European Union, it shows that there is still a lot of room for the financial sector to make concessions to the real economy.

Statistics Bureau data show that in 2023, my country's gross domestic product (GDP) was 126058.2 billion billion yuan, an increase of 5.2 percent over the previous year. From the perspective of the three major industries, the added value of the primary industry is 8975.5 billion yuan, accounting for 7.12 percent; the added value of the secondary industry is 48258.9 billion yuan, accounting for 38.28 percent; and the added value of the tertiary industry is 68823.8 billion yuan, accounting for 54.60 percent.

Compared to 2022, the added value of the primary industry accounted for 7.32 percent of GDP, the added value of the secondary industry accounted for 39.33 percent, the added value of the tertiary industry accounted for 53.35 percent, the added value of the primary and secondary industries accounted for both Decline, while the added value of the financial sector as a proportion of GDP rose by 1.25 percentage points.

From the perspective of the proportion, my country's tertiary industry, including the financial industry, accounts for the largest proportion and contributes the most to GDP.

The high proportion of the financial industry in GDP reflects that indirect financing in China is still the main channel of real financing, and financial institutions have played a great role in the process of helping real financing. When bank deposits and loans expand rigidly, and the growth rate of GDP declines, this proportion will be further increased, the contribution of the financial industry will be higher, and the impact of indicators will be greater.

GDP growth is too dependent on the expansion of the financial sector, bringing about a "false fire" of high financial growth

For a long time, local governments have formulated industrial plans and action plans to increase the added value of the financial industry and its proportion in GDP as the main indicators and assessment tasks to measure the effectiveness of economic development.

For example, a provincial capital city in the east announced in 2023 that "in the first quarter of this year, the added value of the financial industry in the whole city reached 59.525 billion billion yuan, an increase of 9.6 percent over the same period last year, and its share of GDP increased to 14.1 percent. The contribution of the financial industry to economic growth continued to increase steadily." A northeast province in 2020 also released "in the first three quarters, the biggest bright spot in the operation of the province's financial industry is that the added value of the province's financial industry increased by 4.6 year-on-year, becoming the strongest industry in the province's GDP growth rate."

And the continued growth of financial sector value added ahead of GDP growth will also lead to a sustained and significant increase in the share of financial sector value added in GDP.

Thus, the financial sector's contribution to economic growth continues to increase. Under the pressure of local GDP growth assessment, this may bring some growth pressure to the financial industry.

In 2013, the Central Organization Department made structural adjustments to the assessment system for local officials, clearly proposing to weaken the assessment weight of GDP growth, while strengthening the assessment of environmental protection and other aspects. However, the assessment criteria for the internal structure of GDP have not yet seen a particularly typical case.

For a long time in the past, the assessment of lower-level local governments by higher-level governments was mainly based on economic development performance, especially GDP growth. This is also the most critical assessment indicator for local officials. One of the most important goals of the government.

specific to the growth of the financial industry, some local financial institutions have disclosed that the key assessment time points of each year, mainly in the semi-annual and annual, the local financial office (financial bureau) will organize financial institutions to hold coordination meetings to allocate and issue growth indicators.

In order to meet the target requirements at a critical point in time, local banks have to "pull deposits" from enterprises or peers, resulting in a "move" of deposits from other places ". Once the point in time has passed and the statistics are complete, deposits and loans may "return to their original position", especially interbank deposits, which may exacerbate the shortage of funds.

In terms of loan expansion, for a long time before, the credit expansion of the financial industry was more invested in "high growth" areas such as real estate and local urban investment at higher interest rates. This not only raised the cost of physical financing, but also created While the illusion of "high financial growth" and false fire, it may also squeeze out investment in other industries, affecting the quality and efficiency of financial services to the real economy.

Deposits and loans have a great impact on the added value of the financial industry and the growth rate of GDP. How to account for them?

from the accounting of the growth rate of the added value of the financial industry, at present, the added value of the financial industry is calculated according to the sub-sectors such as monetary finance, capital market and insurance. according to the growth rate of the basic indicators of the sub-sectors (mainly using the year-on-year growth rate), the weighted sum is carried out first, and the calculation weights are about 0.7, 0.2 and 0.1 respectively.

Among them, the growth rate of the balance of deposits and loans in local and foreign currencies used in monetary finance, the growth rate of the transaction volume of securities in the capital market, and the growth rate of the original premium income used by the insurance industry.

In addition, the growth rates of deposits and loans need to be further weighted based on their respective proportions of total deposits and loans.

According to the weight, the growth rate of deposits and loans is currently the sub-item that has the greatest impact on the growth rate of value added in the financial sector.

Take a provincial capital city in East China as an example. As of the end of October 2023, the balance of local and foreign currency deposits was 20.02 trillion yuan, and the balance of local and foreign currency loans was 11.01 trillion yuan; deposits accounted for 64.5 percent, and loans accounted for about 35.5 percent.

Multiplying the weight of money and finance (0.7) with the weight of deposits (65 per cent) and the weight of loans (35 per cent), respectively, the weight of the impact of the growth rate of the four basic indicators can be approximated, in order as follows: deposit growth (with a weight of about 0.45), loan growth (with a weight of about 0.25), securities transaction volume growth (with a weight of about 0.2), and original premium income growth (with a weight of about 0.1).

the added value of the financial industry accounts for a high proportion of GDP, which also raises concerns about the "capital shortage" of the financial industry. The excessive weight of deposit and loan growth indicators can easily lead to inflated deposits and loans at critical points, distorting the real situation of the development of the financial industry in various regions.

first of all, the excessive weight of deposit and loan growth indicators will lead to disorderly competition for deposit and loan resources at the end of the month and quarter, especially at the end of the year, and induce the phenomenon of "deposit moving" between regions, especially the high-interest interbank deposits, resulting in a false increase in deposit and loan balances at critical points, distorting the real situation of the development of the financial industry in various regions, and not conducive to objectively reflecting the economic growth and trend changes in various regions, it hinders the central decision-making level from having real and effective data and information.

regarding the false increase and untruth of data that may be caused by GDP accounting methods and assessment index requirements, some bankers in south China said that this situation is more common among regional city commercial banks. regional banks are limited in scale and cross-regional operation, and the index requires the sum of deposits and loans. in order to meet the index requirements, deposits and loans can only be collected at critical points.

Secondly, the current GDP accounting methods and indicators do not fully take into account the differences in industrial structure between regions. For example, Shanghai's financial industry is relatively developed, with a relatively low proportion of heavy asset industries and a relatively high proportion of light asset industries such as service industries. The economic and industrial structure determines the relatively low growth rate of investment and loans in Shanghai. And a second-tier city in South China, industrial and commercial development in general, in order to meet the requirements of GDP growth indicators, mainly rely on local banks to "bear".

In recent years, in order to stimulate the added value of the financial industry and the growth rate of GDP, some cities in North China have carried out intensive coordination and research work closely around the deposits of non-bank financial institutions, so as to ensure that the proportion of added value of the financial industry in the city continues to exceed that of the information industry, ranking first.

Optimize the accounting index and method of added value of financial industry

Based on this, it is necessary to set reasonable targets for the financial sector's value added and its share of GDP, and further optimize the financial sector's value added accounting methods.

The first is to fine-tune the existing method of accounting for value added in the financial sector. For example, appropriately adjust the accounting weights of sub-sectors, reduce the accounting weights of monetary and financial services (deposit and loan growth), and increase the accounting weights of the growth rate of capital market services and the growth rate of the insurance industry. At the same time, in view of the characteristics of non-bank financial institutions deposit volatility, can be considered to exclude.

Second, we will conduct a comprehensive and in-depth study to improve the value-added accounting system for the financial sector. Focus on diversified basic indicators such as operating income, taxation, and profits of financial enterprises. These indicators can be obtained in a timely manner every quarter, and they are relatively objective to replace indicators such as deposits and loans that cannot fully and fully reflect the development of regional industries. So that the growth contribution of the financial industry can be evaluated more comprehensively and accurately.

The third is to consider regional differences. For more developed regions of the financial industry, for example, in Shanghai, Beijing, Shenzhen and other regions, increase the total amount of financial market transactions, asset management scale and other indicators, so as to more scientifically reflect the results of high-quality financial development.

In addition to further optimizing the accounting methods for financial sector value added and GDP growth indicators, it is also necessary to consider the harmonization of macro policies and local government governance. First of all, local governments need to establish a correct view of performance, the central government in the governance assessment standards rich indicators, pay attention to the internal structure of GDP growth, reduce the local government through financial, real estate, urban investment to increase performance motivation;Guide financial institutions to reduce market interest rates and reduce financing costs, so that funds can more effectively support entities; finally, finance and entities are mutually beneficial and harmonious. In the process of optimization, the financial industry should not be excessively suppressed, because in my country's indirect In an environment dominated by financing, it is necessary to ensure the spread level and profit growth of banks and other financial institutions to avoid systemic financial risks.