What Is Gross Fixed Capital Formation?

Gross fixed capital formation. Fixed capital is a component of capital. Total fixed capital formation includes additional new durable goods (commodity) expenditures (purchased and produced for own equipment) on the fixed asset stock added by the industrial sector, government service producers, and private non-profit service producers for households. Go to a net sale of similar waste items. Including government spending on durable goods for civilian use; investment in construction, overhaul, land improvement and development and expansion of forests, plantations, vineyards and other investments; expenditures on purchasing or breeding breeding stock, service animals, and dairy cattle; Reserves, forests and other reproducible and non-reproducible durable goods cost transfers. ^[1]

Gross fixed capital formation

The total formation of tangible fixed assets includes the value of construction (installation) and equipment (equipment) purchased (minus disposal) completed within a certain period of time, as well as the value of land improvement, new additions, breeding, milk, wool, recreational livestock and new economic forests .

The total formation of intangible fixed assets includes the reduction of disposal of mineral exploration, computer software, entertainment and original literary works of art.

The total capital formation in RMB in 2011 was 22.91 trillion yuan, and the total capital formation in renminbi in 2000 was 13.72 trillion yuan, a difference of 66%. ^[2]

The amount of fixed asset investment, also known as the completion of fixed asset investment, is the main indicator of fixed asset investment statistics. It refers to the general term for the workload of constructing and purchasing fixed assets in a certain period in terms of currency and the related costs. It is the most basic source of data for calculating the total fixed capital formation in China.

What is the difference between the two indicators of fixed asset investment and fixed capital formation?
Fixed asset investment and fixed capital formation are two different indicators. Fixed capital formation refers to the total fixed capital formation in the GDP method of expenditure method ^[3] , and fixed asset investment refers to the total fixed asset investment in society in the statistics of fixed asset investment. The main differences between the two can be summarized as follows:

1. The total investment in fixed assets in the whole society includes land purchase fees, old building purchase fees, and old equipment purchase fees; total fixed capital formation does not include these costs. As the cost of land use increases, the proportion of land costs in the investment gradually increases. the trend of.

2. The total investment in fixed assets of the whole society only includes investment in projects with a total planned investment of more than 5 million yuan, excluding investment in projects with a total investment of less than 5 million yuan, and excluding sporadic purchase of fixed assets; the total fixed capital formation includes the planned total investment of 5 million yuan Investment in projects above RMB 1 million also includes investment in projects below RMB 5 million, as well as sporadic purchases of fixed assets.

3. The total investment in fixed assets of the whole society does not include the value-added of commercial housing sales, the increase of fixed assets for the trial production of new products, and land improvement expenditures that have not been formally established; the total fixed capital formation includes these values.

4. The total investment in fixed assets only includes the increase of tangible fixed assets. The total fixed capital formation includes both the increase of tangible fixed assets and the increase of intangible fixed assets such as mineral exploration and computer software. ^[4]