Ccp Data Forms: Frequently Asked Questions: Fill & Download for Free

The US government has alleged two major categories of malfeasance/ security concerns with regards to Huawei, which can be broadly described as follows:Inherent lack of independence of Chinese companies headquartered and located primarily in China from CCP dictatesUnder Chinese law and Chinese governance in practice, Huawei very likely could not refuse any demands for cooperation or information from the CCP and the CCP could be reasonably expected to make such demands, whether for information, technical support, or modifications to Huawei business practices (Report: Australian intelligence knows Huawei was used in espionage). The 2015 Chinese national security law (https://www.cov.com/~/media/files/corporate/publications/2015/06/china_passes_new_national_security_law.pdf) is often cited as a cause of this, because it obligates Chinese companies to cooperate with the Chinese defense and intelligence apparatus. While this does create some concerns that Huawei would be obligated to cooperate with the PLA/Chinese intelligence agencies, it's not like this wasn't a concern before 2015 - the ‘operating in a dictatorship’ part is the salient point.In practice, what is significantly more concerning is the recent trend by the government to more directly exercise control over Chinese companies by, among other things, organizing CCP cells (“party groups") within Chinese companies and organizations to enforce ideological conformity and advance CCP interests and cooperation (China's Communist Party tightens grip on private firms, joint ventures, Exclusive: In China, the Party’s push for influence inside foreign..., Fact Sheet: Communist Party Groups in Foreign Companies in China - China Business Review). Why would this potentially be concerning? This would be because the Party group within a company would be a source of influence external to corporate management, and with interests that diverge from normal corporate interests (making money). This could include, for example, attempting to influence company policy to be more favorable to CCP interests, or attempting to expand Party influence by hiring more Party members. I quote from the Reuters and CBR articles:One country head at a major European manufacturer with a southern China joint venture said that late last year it allowed a party unit to meet on company premises – after hours. The party unit asked for overtime pay to hold the meeting, which the company rebuffed. But then it also demanded the company hire more party members, and even tried to weigh in on investment decisions.“That’s when we said this is a no-go zone. We didn’t anticipate that they would discuss investment decisions,” the manager told Reuters.[…]A sales and marketing head in China for a major U.S. consumer goods firm said its party cell had recently become more active, and had pushed for locating a new facility in a district where the local government was promoting investment, a move the company made.[…]Some USCBC companies have reported that their state-owned joint venture partners have recently approached them about altering their articles of association to support party groups within the joint venture, even going as far to request that they be amended to allow critical matters to be approved by the party organization before they are presented to the board.Under these circumstances, it is questionable that a company such as Huawei with high geostrategic importance and at the forefront of advanced technology could be considered meaningfully independent from the CCP or in a position to refuse Party requests in any areas relating to its area of expertise, which both China and America define as a key strategic interest.Sometimes also cited is the relatively opaque nature of Huawei's corporate structure. Huawei self-describes as an employee-owned collective, the founder Ren Zhengfei owns a little over 1% but the rest of the ownership is, in theory, by its employees. Legally speaking, this is not quite accurate, Huawei is owned by its employee trade union, via its “trade union committee.” All Chinese Huawei employees are required to belong to this union. However, there is pretty good reason to think that if the union functions similarly in practice to other Chinese trade unions, this makes CCP control or influence very likely, and true employee ownership quite unlikely (Christopher Balding). I quote again (Labour relations in China: Some frequently asked questions):There is only one legally-mandated trade union, namely the All-China Federation of Trade Unions (ACFTU). All enterprise trade unions have to be affiliated to the ACFTU via a hierarchical network of local and regional union federations. (See simplified organizational chart right). The ACFTU is primarily under the control and direction of the Chinese Communist Party. Any attempt to establish an independent trade union movement is seen by the Party as political threat.Describing Huawei as independent of the CCP on the grounds of its true ownership being by its trade union is less than convincing.2. Allegations that Huawei has engaged in or benefited from economic espionage, or plays a significant role in enabling espionage, or is a significant contractor/supplier for the PLA/Chinese intelligence agenciesThe evidence here is overall much more circumstantial, particularly in the case that it is directly enabling espionage. The evidence that Huawei is a beneficiary of economic espionage is pretty overwhelming. Nevertheless, as the paramount telecommunications corporation in China, and also a market leader in telecom and mobile hardware and software development in China, it is fairly inconceivable that Huawei does not have extensive cooperation with the Chinese national security complex. While this, to be fair, would not be unusual compared to other major technology and telecommunication companies in other states, the evidence of malfeasance in economic espionage and circumstantial evidence of lending assistance to political espionage would be a legitimate concern for US security leaders. The WSJ’s long-form article on this topic (Huawei’s Yearslong Rise Is Littered With Accusations of Theft and Dubious Ethics) covers it much better than I could but some key quotes:The secretive chamber had counterparts elsewhere in Huawei’s empire. Tucked in its offices in Texas and elsewhere, Huawei had built spy-proof secure rooms that were off-limits to American employees, according to current and former U.S. officials.Counterintelligence officials believed the discovery indicated Huawei was handling information more like a state intelligence service, with regimented tiers of secrecy, while relying on a protected communications channel with Beijing.Asked about the rooms, Huawei said they were installed to prevent spying against the company, not enable spying on others.Eighteen months before the Supercomm imbroglio erupted, Cisco accused Huawei in January 2003 of copying its software and manuals—the first time Huawei had to fight a major international allegation of its theft.“They have made verbatim copies of whole portions of Cisco’s user manuals,” Cisco said in its lawsuit. Cisco manuals accompany its routers, and its software is visible during the router’s operation; both are easily copied, Cisco said.The copying was so extensive that Huawei inadvertently copied bugs in Cisco’s software, according to the lawsuit.“Huawei couldn’t release its routers for shipment until it fixed a substantial number of the common Cisco bugs contained in the Huawei routers” for fear of giving away the plagiarism, said former Huawei human resources manager Chad Reynolds in a court filing. Cisco declined to comment.Cisco General Counsel Mark Chandler flew to Shenzhen to confront Mr. Ren with evidence of Huawei’s theft, which included typos from Cisco’s manuals that also appeared in Huawei’s, according to a person briefed on the matter.Mr. Ren listened impassively and gave a one-word response: “Coincidence.” A Cisco spokesman said: “As a trusted company, we do not disclose information about private business meetings.”Huawei settled Cisco’s lawsuit in July 2004, after admitting it had copied some of Cisco’s router software. A month later, Huawei told Light Reading it had fired Mr. Zhu, its man at Supercomm. He couldn’t be reached for comment.Rui Oliveira, a 45-year-old Portuguese multimedia producer, told the Journal he flew to Huawei’s Plano offices in May 2014 to meet Huawei executives, who were interested in his patents for a camera attachment to smartphones.In a conference room, surrounded by a dozen empty chairs, Mr. Oliveira recalls, two Huawei executives listened as he shared data on his product which he hoped to license manufacturing to Huawei. He recommended pricing it at $99.95.“We’ll talk later,” he says Huawei told him.Three years later, a friend in Portugal asked him why Huawei was selling “his camera.”“Huawei? That’s impossible! What?” he remembers saying.Then he saw pictures: down to its beveled edges and rounded corners, the Huawei product was virtually indistinguishable from Mr. Oliveira’s patent. Huawei’s retail price? $99.99.There is one final allegation which has been fairly pervasive in recent months - that Huawei’s control over 5G telecom infrastructure/Huawei’s prominence in mobile manufacturing could give it the capability to insert backdoors into the code. Some allegations have been leveled recently but to the best of my knowledge, no ‘smoking gun’ has been found. In terms of most recent news, an alleged Vodafone backdoor as reported by Bloomberg (Vodafone Found Hidden Backdoors in Huawei Equipment) was found to be substantially exaggerated and from a technical standpoint relatively innocuous (Oh dear. Secret Huawei enterprise router snoop 'backdoor' was Telnet service, sighs Vodafone). Another allegation, of backdoors found in equipment supplied to KPN as I understand it is still open (Dutch spy agency investigating alleged Huawei 'backdoor': Volkskrant). At present, I do not think there is enough evidence to conclude one way or the other whether this reflects an actual backdoor.However, speaking from a cybersecurity perspective, I am personally very skeptical of the entire backdoor line of argument. Backdoors are a shockingly inefficient way for a cyber actor to gain access. They are extremely noisy and easy to detect, a hardware backdoor adds multiple extra hoops for a cyber attacker to jump through, and once discovered, bring great discredit on the provider of the backdoor making it unlikely it will be used again. Most cyberattacks, in any case, are not supply chain based.David Seidman covers the implausibility of such attacks fairly well here: David Seidman's answer to How serious is the hardware hack of tech giants by Chinese spies?As a result, I’m actually personally skeptical we will ever find hardware backdoors in Huawei hardware precisely because systematic hardware backdoors would be an absolutely insane way to conduct a cyberattack. As David notes, once your backdoor is burned somewhere, it is burned everywhere, and you will have brought great discredit on your company and country for an inherently very limited gain.On the other hand, it is pretty clear that for a country to allow another country to manufacture most of its telecom hardware - and also for a country to be supplying the components for the telecoms hardware of its chief geographical adversary and a major military contractor in its own right would also be insane - And this second point is why the US regards Huawei as a major danger, not the first - but the prevalence of the first line of argument, especially in a lot of the US's initial messaging about Huawei has very likely severely undercut the US anti-Huawei effort by making a difficult claim which is unlikely to ever be validated.To sum up, the Huawei controversy is in its own way essentially an outgrowth of the rise of Great Power competition between the United States and China, in between which major companies in areas of key strategic interest, such as advanced technology and telecommunications, will inevitably be caught. Companies which participate in these key strategic sectors must expect that they will be pressed into the service of national interest, and in particular, if the degree of service demanded is expected to be high or extensive, then the trust by the companies’ country’s Great Power rivals will be accordingly much less. For national champion companies, such as Huawei, located in countries which exert a high degree of control over enterprise such as China, the suspicion can only be expected to be extremely high. This is deeply unfortunate but also inherent to the nature of Great Power competition.

Why did China end the collective leadership system introduced by Deng Xiaoping after Mao's death?President Xi Jinping has collected personal power in a way which has not happened since Mao, and makes important decisions with his own advisors, frequently going around government ministries and the Politburo. Why the change?Oh, Gosh, let’s not romanticize Deng’s power structure TOO MUCH! Yeah he was a great guy and everything, but exactly what official position did Deng hold? Chairman of the Central Military Commission, from 1983 - 1989. A position he kind of invented himself. His signature “South Tour” that accelerated the opening of China was in 1992, when he was officially a retiree. In fact, during Deng’s entire political career, he was never the President of China, nor the Premier of China. But he had the power to get rid of the then Prime Minister and the General Secretary of CCP. Without the “collective leadership system”, why was he even in the information loop? Why was his opinion, on whatever, important? This “collective leadership” thingy was mostly just some dope for Westerners to explain why some guy who’s not officially in the Cabinet needed to be consulted. Foreigners can’t understand how some guy with some obscure mediocre title could be the most powerful guy in China. It was too complicated to explain, so the Chinese mumbled “yeah well we consult everybody. Collective leadership, you know”. Yeah right. Never mind that it never made sense from Day 1. Like When Zhao Ziyang was removed from hid job as the Premier of China, couldn’t he have vetoed the move if all Politburo had to agree? No? Well then.In the Chart below, the red line is the General Secretary of CCP, the yellow line is for the premiers. Where is Deng? None of the above!During the first 50 years of the founding of PRC, the Chinese government title <-> corresponding responsibility <-> corresponding political power was in fact very fluid. Former Chinese presidents like Li Xiannian and Yang Shangkun are just some guy who joined CCP super early and had been proven to be, at least, quite harmless. It was not until Jiang Zemin, who took the position in 1993, that this position started holding significance. Not because of any additional power invested onto this position, but because Jiang was simultaneously holding the position of the General Secretary of the Communist Party of China. So then you may ask, does being the General Secretary of CPC give you the highest power? Well, not necessarily. It’s a high-risk position. Since the founding of CPC, about half of its General Secretaries ended up getting purged somewhere down the line… So there’s actually no single determinant to say who is the top dog in China.But it doesn’t mean that the Chinese political structure doesn’t make sense. It makes eminent sense for the Chinese, and if you take off the Western cultural glasses and try to look at it from their own perspective, you may get it somewhat. Discussion on China’s political structure through the Western lens often miss the point entirely, because of the fundamental cultural difference. Especially during the last 20 years where “a perfect, permanent” political structure became synonymous to “democracy”, “freedom”, the ultimate goal of political development in itself.That’s … just … not … how the Chinese traditionally think. For the Chinese, the whole point of a government is to do certain things an individual can’t do very well. They want a government to deal with certain critical tasks in the short term, and achieve certain goals in the long term. They agree to a goal, and then they assemble the power structure around it to get it done. The power assembly is meant to serve the goal, so the power assembly changes rather fluidly as the goals evolve over time. When you need to pound a rock, you build a hammer for it. When you need to weave a sweater you build weaving needles for it. That’s it.That’s why the titles are not nearly as important as those in the Western culture. What’s important is Who’s doing What with Whom, that’s the only thing that’s important. The title is mostly just a signaling to the wider audience in key positions. Sometimes you need a signaling, sometimes not. Thus the title, whatever it is, has always been at most, semi-important. If you look into the Chinese Constitution draft in 1982, exactly what power does the President of China has? Nothing but “try to look good in front of the foreigners”. Pretty much “Show up when we have visitors, and wear a suit”-kind of thing.Thus the China Inc. has gone through the somewhat “founder + Chairman of the Board” stage with Mao, the “founder and nothing else” stage with Deng, the “CEO + Chairman of the Board” with Jiang, the various “CEO only” or the “Chairman of the Board only” stage with other leaders, and if you’ve been playing this game for 5,000 years like China, you know the real driver, depending on the circumstances, maybe the tech guy, maybe the marketing guy, maybe the whoever that doesn’t have his name on a nice, embossed name card. If you are the VC, you don’t invest because these guys all have the correct titles. You invest because the team has assembled all the necessary building blocks of talent and experience to make the product. The titles are just a rather fluid indication of those building blocks.So if you try to make sense of the Chinese political structure by starting from the titles, you are probably 10,000 miles off to begin with. Even the “President of China” title is a relatively new invention, barely 20 years old. The only reason it was invented then - was because by then most other countries in the world has this title, so the Chinese said, well why don’t we have this “president” thingy too, it sure makes it easier for the diplomatic folks, what with their protocol stuff. The importance of titles are just so-so. The way you can make sense of whatever Chinese political structure is to start from the critical tasks during this term. The critical tasks for the Xi term is very clear: one, clean up the corruption; and two, manage economic transition. OK, now you know the task at hand. You then form the organization structure to get it done. You take a look at the whole team, and you pile the titles according to each person’s expertise and background. Each person can take charge of 1 - 3 complementary hats. If you need more talent in one area, you invent some new titles. If you need less power in other areas, you delete a couple of titles. Voila, there you have it. The whole thing is built around getting the job done. Once the job is done, you move on to the next goals/critical tasks, and you can make/delete/modify titles to suit the next tasks. And if something happens that will lead to a drastic change in the task priority, the whole power structure can change on a dime accordingly.So for the two critical tasks, Xi is simultaneously tightening the core team to fight corruptions, while expanding the core team to support economic transition, because he needs less people who can veto corruption investigations, and more people who can can do the heavy push on economy. It’s not a simple “shrink” or “expand”. And whatever the team is doing so far, the result doesn’t look too shabby.China's economy on track for stable growthOptimistic Moody's Upgrades ChinaStrong China data relieve pressure for stimulus - FT.comPS: A good question below on the mechanics of China’s election that I copied and pasted here.So the key question is, who is the “You” that determines the goals and creates the structure. How does the guanxi (relationships) fix into the picture?That’s a good question. Short answer is, it’s the two previous terms of Politburo of the Communist Party of China, plus the current term. Each term has about 25 people. The official answer is the People’s Congress of 3,000 members, but they pretty much always approve the recommendations from the Politburo.The big difference between the Chinese political thinking and most other countries is the emphasis on inclusiveness and consistency, because a country of 1.4 billion people can’t move on a dime, and can’t afford to have even 1% of the population out of the political loop, 1% of 1.4 billion is 14 million. That’s more than the population of a lot of countries in Europe, so you can’t just say, well you lost the election so shut up for the next 5 years. Also, all major policies have 20 - 50 years planning and execution cycle, so you can’t switch policy directions once every 2 years. Nothing will get done. China has always been one of the biggest countries by population, like for the last 2,000 years, so this type of political thinking is baked into the culture itself. It becomes THE COMMON SENSE.So contrary to the US/EU structure, Xi gets to bring in may be 1 or 2 more people into the existing core team, and his strongest opponent in the election will end up being the Premier. The other members of the Politburo Standing Committee were all elected into it one or two terms ago. It’s a staggered, inclusive process. If you take the current US election as an example and shadow it onto China, then it’s basically this:After Obama is gone, 3 or 4 of his top cabinet members will stay on. Then during the election, Hilary, Trump, Bernie Sanders got the top three vote counts, so all three will join the cabinet. If Hilary gets the top vote and Trump got the second most vote, then Hilary will be the President having overall responsibilities, and Trump will be the Premier whose primary responsibility is domestic economic growth. But the whole cabinet, if united, gets to create/delete/modify organizations to suit the task at hands. If they are united.Now you sit back and imagine how Hilary, Trump, and Sanders have to work together to get things done, plus 3 - 4 members of the cabinet more experienced than she is in the job, with the goals already set in the 5-year plan (which was also staggered in ahead of you). If all 7 of them agree with each other, they can be more powerful than most other governments on earth. If they can’t agree with each other, all of them will fall flat on their faces. The seven of them can fight each other to a pulp behind closed doors, but if you say one bad word about each other in public, that’s a firing offence. It’s like that. And then you get to manage China, with the total population close to Europe and African combined, and with top tier cities on par with Paris and London, and poor villages and hamlets with 20 people and 200 goats living on mud bed, like the poorest dump in Africa. Your evaluation criteria is “90% satisfaction rating”. Now go do your job!Managing China is an extremely technically challenging job.

I do believe it is a question worthy of academic study. I tend to believe it is underestimated by 15% to 30%. I point to norminal GDP measured by RMB yuan，so my elaboration has nothing to do with exchange rate.Actually the dean of school of economics, Fudan University, Zhang Jun and his team are working on a research related to it. Their achievements have been partly published on a top famous American journal. Until now, they have found in the metholody of expenditure calculation, investment is overestimated, while consumption is underestimated. I am glad to briefly introduce his study here and share my own opinion with you.What is GDP? GDP is the value of total production and service that happen in a certain area during a certain period.1. The two methodologies China takes to calculate GDPIn China there are two main sorts of calculation of GDP. The first one is Production method, which was learnt from USSR. In a planned economy, most of the economic activities could be observed, as a result of which you can just summarize added value in every step of the production and finally achieve the total GDP. There is no marketing, no consulting and no finance with which you can raise the value of the commodities without any material output. You just need to count how many pair of trousers produced in this year and how many haircuts done. As all the prices are set by the central planning committee instead of the market , you just need to do a simple math.After the economic reform started in 1978, market was introduced and there appeared foreign enterprise and private enterprise. Nowadays it is impossible for national bureau of statistics to observe most economic activities. However, the Chinese still refuse to quit the old method. They follow all the material into production flowing all around the country, and calculate added value in every step of the production and selling and marketing. Thus, how do they deal with a lot of economy activities which are less “worthy” and less possible to observe? They just “guess”. They In this way, they get a National GDP, which is used for publication. Obviously, the number must not be as accurate as that in western world.Why don’t the Chinese government claim a GDP calculated via the other method, which is widespreadly taken by western country? Is there any conspiracy inside it? The answer is the outcome of the other method is even farther from accurate.After the economic reform started in 1978, market was introduced and there appeared foreign enterprise and private enterprise. Nowadays it is impossible for national bureau of statistics to observe most economic activities. However, the Chinese still refuse to quit the old method. They follow all the material into production flowing all around the country, and calculate added value in every step of the production and selling and marketing. Thus, how do they deal with a lot of economy activities which are less “worthy” and possible to observe? They just “guess”. They In this way, they get a National GDP, which is used for publication. Obviously, the number must not be as accurate as that in western world.Why doesn't the Chinese government announce a GDP calculated via the other method, which is widespreadly taken by western country? Is there any conspiracy inside it? The answer is the outcome of the other method is even farther from accurate.The second method is named expenditure method, which is also applied by Chinese government, especially by local government. In fact, local governments don’t have the ability to follow the material of production, which flow around the whole country. They have only this option to use expenditure method. Expenditure method divides GDP into four section: consumption, investment, government expenditure and net export. Try to understand that today every value you create is used in these four ways. Theoretically the outcome of expenditure method should be equal to that of production method. For decades China has been trying to transfer to expenditure method in order to make its economy data more comparable to western ones. Additionally, expenditure method is more suitable under the circumstance of market economy, where residents’ consumption and investment of small size are much easier to observe than production activities of small size.2. The man-made GDPIf you try to understand something about China’s economy, you can be confused ignoring the role of government, the same with GDP.In the year of 1980, Deng Xiaoping told the whole CCP, that economic development must be the coral and superior task for the party. In China, regional leader like province governor and mayor are not elected out. They are promoted by their superior based on their performance. Investment introduced is a very influential indicator to measure the performance of the regional leader. For that reason, local governments have a strong motivate to exaggerate the amount of investment. How did they do that? By counting consumption into investment, by making up number, by all means! Employees of local bureau of statistics are extremely stressed in the end of the year, when they have to try every possible method to make number for investment “more beautiful”.Beside investment, local government also collect data for residents’ consumption by sampling research. Government expenditure and net export are highly transparent, as they are always recorded in detail.You may now know why PM Li Keqiang said that the GDP were man-made. He was pointing at investment reported by provincial governments. Let us see how ridiculous are these numbers.n 2015, the sum of GDP of 28 provinces outnumbered the GDP of the whole country (mainland)，which consists of 31 provinces. Meanwhile, 24 in 31 provinces had a higher growth rate than national average. Those “facts” are obviously absurd.n 2015, Liaoning province, which was considered as a top economically developed province in north China, was found report a fake GDP. The central government sent an investigation team to the province to recheck the number. In the year following, 23% of its GDP was removed. Tianjin and inner Mongolia had the same fate. Binhai district of Tianjin, which took up nearly 50% of GDP of the whole city, had to remove even 33% of its reported GDP. Inner Mongolia was much better, with overreporting a number equal to 40% of its manufacture output.In that case, the central government would never publish a number which is produced by adding GDP of each province together, which are insanely overestimated. Fortunately, it still has another number available, which is produced by production method.3. What is not included in China’s GDPAs I explained above, production method is of less ability to observe the economical activities of small size. We can draw an analogy: the method of expenditure is a person myopic 100 degrees, but the method of production is a person myopic 500 degrees.What the method does not include to calculate GDP in China? Let me show some.First, most of economic activities conducted by individuals in traditional rural areas. The picture below is of the countryside self-building house in Tongxiang, Zhejiang. It cost 800 thousand RMB (approximately 120 k US dollars) for a household to construct it and 400 thousand RMB to facilitate it. Two fifths of the total cost is laborer wage. Usually local workers are hired to do the job, which is not recorded by any bureau. Some of the construction materials come from local manufacture from where local residents buy in a special way, which is also not recorded. In short, about 90 thousand of GDP is produced here for each house, which is not included in GDP. It is quite normal phenomenon in China.There is a considerable proportion of villagers is used to keeping a few pigs and a group of chicken. They do not want to sell them. Every weekend when the son comes back with his family, the old villagers will kill a chicken to make a dish. These activities are obviously material production. Vegetables and fruit trees are similar. In some villages there is frequently at least one market, where there is prosperous business, which should be considered as service production. However, they are all not recorded and no one in the government is willing to calculate that number.Second, service without a contract in cities. China is still a society based on personal relationship. A lot of transaction of service take place between people who know each other. For example, you may ask a classmate of your nephew to teach your son in the summer vocation. This kind is disappearing in big modern cities, but still very common in small cities.Third, virtual rent. Virtual is usually included in OECD countries’ GDP. What is virtual rent? Some people live in property owned by others and they have to pay for this. The rent is included in GDP. The other people live in their own estate. Some countrie assumes this kind of people pay rent to themselves and adds the rent to GDP. Virtual rent takes up approximately 10% of US GDP. In China virtual rent does not count, where there is very high percentage of people living in their own estate. According to Zhang Jun, this part is about 6% of current China’s GDP number.Fourth, illegal economic activities, including drug deal, weapon deal and sex services, which is included in some developed countries, including UK and France. What is worth mentioning, is that street vendor may offer you great convenience and enjoyment, but their activities are theoretically illegal. That’s why they are often fined and driven away. Their activities of course do not count as GDP too.4. Which parts are underestimated in China’s GDPBeside some kinds of economic activities excluded from counting as GDP, there are also some kinds of economic activities largely underestimated by the bureau of statistics. These activities usually belong to service sector.In China we don’t have a very mature system to collect tax, which can be considered as an obstacle to develop the economy smoothly in the long term. It is not possible for the government to send staff to every retail shop and barber shop to check their income. People usually don’t ask for receipt after they pay their bills so the actual number of the total consumption is hidden. Because of circumstances mentioned above, the bureau has no idea how much value these businesses create. In China’s data form, there are always two categories of service: one is Above Designated Size, and the other is Below Designated Size. The picture below is a typical form of services. This is the data of Jilin province in 2017.Then what is the difference between the two categories? The first one came from official audit, and the second came from estimation (or guess). Because the GDP is directly related to the amount of tax needed to collect but you can never collect tax from those Below Designated Size businesses, the government intend to largely underestimate it.What is the Designated Size? For wholesale, it is annual sale of 20 million RMB yuan (about 2.9 million US dollars); For retail, it is annual sale of 5 million RMB yuan (about 0.72 million US dollars) and for catering, it is annual sale of 2 million RMB yuan (about 0.29 million US dollars).Let make that easier to understand. The following pictures shows some businesses Below Designated Size.middle-sized cheap restaurantsmall restaurantunchained convenience shopusual groceryAverage wholesale departmentUsual caféMy older cousin has a retail shop which sells women’s clothes. She earns 300 thousand yuan as profit every year, but she never pays any tax. The only burden caused by the government is the annual registration fee, which is 600 RMB. As a result, no one has come to her to check her income. The value her shop creates is just guessed, which may be considered 100 thousand or even less.