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According to the financial data of industrial enterprises recently released by the National Bureau of statistics, from January to April, the profits of Industrial Enterprises above Designated Size nationwide increased by 6.5% year-on-year, and the growth rate was 0.9% lower than that in the first quarter. Among them, the profit increased by 4.2% in April, 6.9% lower than that in March.
Liang Jing, a researcher at the Institute of international finance at the Bank of China, said that the slowdown in industrial profit growth was mainly due to the slowdown in economic demand and income from non main activities. In April, the growth rates of investment, consumption and export all fell down, which made it difficult to form a strong support for industrial production and sales. The main business income of enterprises increased by 2% year-on-year, 2.6% lower than that in March. At the same time, the pulling effect of income from non main business activities on profits is not sustainable. The investment income of enterprises turned from an increase of 20.4% in March to a decrease of 19.8% in April; the net non operating income increased by 56.2% year-on-year, down 12.1 percentage points compared with the previous month, and the contribution of investment income and non operating net income to the newly added industrial profits decreased.
He Ping, director of the industrial efficiency division of the National Bureau of statistics, said that investment income has changed from rising to falling, and its effect on profit growth has also changed from positive to negative, reducing the profit growth rate of all industrial enterprises above Designated Size by 2.7 percentage points.
In addition, Guo Lei, chief Macro Analyst of Founder Securities, pointed out that there was a base effect in the decline of industrial enterprises' profit growth in April. In April 2016, there were 20 working days and 21 days in 2012-2015; however, the working days in March this year were one more day than those in the same period last year. This will lead to overestimation in March and underestimation in April.
A number of experts believe that, in a comprehensive view, the industrial enterprise benefit data released this time still presents some positive changes. He Ping believes that positive changes are mainly manifested in four aspects. First, profits of industrial enterprises in April continued the growth trend since the beginning of the year. Since this year, the profits of industrial enterprises have been increasing every month, which has changed the situation of profit decline in 2015. Second, the profits of high-tech manufacturing industry increased rapidly. From January to April, the profit of high-tech manufacturing industry increased by 21.6% year-on-year, 15.1 percentage points higher than that of all industrial enterprises above designated size. Third, the decline in profits of major raw material industries such as steel and nonferrous metals has been reversed. The fourth is the negative growth of finished products. At the end of April, the finished product inventory of industrial enterprises decreased by 1.2% year-on-year, which was the first negative growth in recent years, indicating that the pressure of enterprise inventory is easing, which is conducive to the release of enterprise capacity and the increase of production in the future.
Guo Lei said that among the industries with relatively high prosperity in recent years, one is black and nonferrous smelting, whose growth rate has changed from negative to positive, obviously benefiting from the narrowing of deflation, high opening rate in the middle reaches and changes in price expectations; the other is the agricultural and sideline food processing and food manufacturing, which both bucked the trend and accelerated slightly compared with last month, obviously benefiting from the formation of the re inflation cycle; Third, the growth rate of electrical machinery and equipment manufacturing industry increased by 1.4 percentage points, which should be related to the high growth of new projects invested in fixed assets.
Liang Jing believes that it is still difficult to be optimistic about the future trend of industrial enterprises' efficiency improvement, which depends on policy support in the short term. At present, the downward pressure on the economy is still great, the problem of overcapacity is still prominent, and it is difficult for industrial enterprises to improve their profits substantially. In particular, state-owned enterprises are mostly concentrated in some heavy industries and overcapacity areas, and their profits fell by 7.8% year-on-year from January to April, an increase of 2.1 percentage points over the previous month. At the same time, there are still uncertainties in the real estate market and the price recovery of bulk commodities, and the profitability sustainability of the industries which contributed more to the new industrial profits in the early stage is not strong. However, the implementation of policies such as cost reduction and stable growth in the short term is conducive to the stability of business efficiency.