According to the news from website of National Bureau of Statistics of China, National Bureau of Statistics of China released the actual industrial profits of Chinese enterprises above designated size from January to July on August 27. The news indicated that from January to July the industrial enterprises above designated size realized profits of RMB 2,678.5 billion, representing a YoY decrease of 2.7%, which was bigger than the 2.2% from January to June; the profits achieved in July was RMB366.8 billion, a YoY decrease of 5.4%, the biggest decrease of this year.
News of the National Bureau of Statistics of China pointed out at the same time that from January to July, the profits realized by state-owned and state-holding industrial enterprises above designated size were RMB784.7 billion, representing a YoY decrease of 12.2%; the profits achieved by collective enterprises and private enterprises amounted to RMB42.6 billion and RMB818.7 billion, up by 7.8% and 15.5% YoY, respectively; while the profits gained by joint-stock enterprises and enterprises funded from Hong Kong, Macao and Taiwan reached RMB1,568.2 billion and RMB609.0 billion, down by 12.6% and 15.5% YoY, respectively.
Among the 41 industrial sectors, 25 realized YoY growth of profits, while 15 sustained the YoY decrease of profits, and 1 turned gains into losses. The profit growth of major sectors was as follows: the profits of the agricultural and sideline product processing sector, the automobile manufacturing sector, the electrical machinery and equipment manufacturing sector, and the electricity and heat production and supply sectors gained by 16.6%, 10.2%, 1% and 29.3% YoY, respectively; while the profits of the petroleum and natural gas extraction sector, the raw chemical materials and chemical product manufacturing sectors, the ferrous metal smelting and rolling processing sector, the general equipment manufacturing sector, computer, communication and other electronic equipment manufacturing sectors dropped by 2.1%, 21.3%, 60.8%, 0.9% and 1.6% YoY, respectively. The petroleum processing, coking and nuclear fuel processing sectors made a loss as compared with the profit making at the same period of last year.
(Statistical coverage: since 2011, enterprises above designated size refer to all industrial enterprises with annual revenue from principal business over RMB20.00 million instead of the former RMB5.00 million; data collection: the financial reports of enterprises above designated size are subject to the complete survey by month, while the data in January are not required reporting); industrial classification standards: since 2012, the new industry classification standard for national economic activities GB/T4754-2011 was implemented by National Bureau of Statistics of China, the industrial sectors were expanded to 41 from the former 39.)
The YoY profits of industrial enterprises dropped continuously due to the recent economic downturn in China. It is expected that the slowdown of economic growth in China will probably last for a while. In view of this, China’s central bank (PBOC) shall ease the monetary policies moderately in the future, moreover, the government shall also increase the structured investments to stabilize the overall economy gradually.
According to the data, given the rapid slide of enterprises’ profits, this round of slide of the real economy will last for a while, and the turnaround is expected to be seen after four or six months.
The recent price bound of houses and agricultural products restrains further easing of the monetary policies. Meanwhile, the central bank now is still very prudent, but next, the government shall ease the monetary policies moderately while continuously implementing the policies controlling the property markets strictly, also increase the structured investments. Only thus can it stop further slide of the economy.
The industrial profit slide will weaken the demands of up-stream and down-stream demands in the future through the pass-through effect. Thus, the economic sector will probably face the nightmare of deflation.
