Looking forward to 2020, the efficiency of Chinese industrial enterprises is expected to gradually improve. It is expected that the profit growth rate of industrial enterprises above designated size in China will change from negative to positive in 2020, achieving a slight rebound.
The Chinese economy in November once again released positive signals.
Data released by the National Bureau of Statistics on December 27 shows that in November 2019, the total profit of industrial enterprises above designated size increased by 5.4% year-on-year, and in October, this indicator fell by 9.9%.
The acceleration of industrial production and sales growth and the narrowing of the decline in PPI are the main reasons for the profit growth of industrial enterprises to change from negative to positive. In November, the added value of industrial enterprises above designated size increased by 6.2%, and the revenue of industrial enterprises increased by 5.3%, which was 1.5 and 3.8 percentage points faster than that of October. In the same period, PPI decreased by 1.4% year-on-year, and the decrease was narrowed by 0.2 percentage points, while the purchase price of industrial producers decreased by 2.2%, and the decrease increased by 0.1%.
It is worth noting that in November, the profits of private enterprises and small enterprises increased by 14.7% and 8.6% year-on-year, respectively, and the growth rates were faster than the previous month by 9.9 and 5.6 percentage points, respectively. This year, China is expected to reduce taxes and fees by 2.36 trillion yuan and clear the debts by more than 600 billion yuan, which has greatly improved the profitability of private enterprises and SMEs.
Improve both production and revenue
Data show that from January to November, the total profits of industrial enterprises above designated size reached 5.61 trillion yuan, a year-on-year decrease of 2.1%, a decrease of 0.8 percentage points from the January-October period.
In the month of November, the total profits of industrial enterprises above the designated size reached 5,93.91 billion yuan, an increase of 5.4% year-on-year. This was the highest point of the year, except for March (the Spring Festival dislocation showed large fluctuations), and the growth rate in October was A year-on-year decrease of 9.9%.
Zhang Yali, an engineer from the Institute of Industrial Economics of the CCID Research Institute of the Ministry of Industry and Information Technology, told the 21st Century Business Herald that industrial profits improved significantly in November, better than market expectations. This is due to the reduction in corporate costs due to tax and fee reductions. On the other hand, market demand is marginal improve.
Zhu Hong, a senior statistician of the Industrial Department of the National Bureau of Statistics, pointed out that there were two reasons for the profit growth of industrial enterprises from negative to positive in November: one is that the growth of industrial production and sales has accelerated significantly; the other is that the decline in the ex-factory price of industrial products has narrowed. Changes in industrial product prices in November affected the profit growth rate of all industrial enterprises above designated size by 4.0 percentage points from October.
Zhang Yali said that the improvement in industrial production in November was mainly in the equipment manufacturing industry, especially the marginal improvement in the automobile manufacturing industry: the value added of the equipment manufacturing industry increased by 8.5% year-on-year in the month, and the automobile manufacturing industry increased by 7.7%, which was 2.0 times faster than the previous month. , 2.8 percentage points.
The reason for the improvement in industrial revenue is the boost of the peak consumer season at the end of the year. “In November, the total consumer goods of the company increased by 8.0%, which was an acceleration of 0.8 percentage points from the previous month; December was the peak Christmas consumer season abroad, and industrial exports were often at 11 Centralized customs clearance will also usher in the domestic New Year's Day and Spring Festival consumption peaks, which will also improve the revenue of the consumer goods manufacturing industry in that month. "Zhang Yali said.
In terms of prices, she said that the narrowing of the decline in PPI reflects a slight improvement in the supply and demand of industrial products, while the increase in the decline in upstream purchase prices has reduced the cost of industrial enterprises, which has led to improved profits.
In addition, the profit growth rate of industrial enterprises above designated size in November last year was only -1.8%, a decrease of 5.4 percentage points from the previous month. The decline in the base has increased the year-on-year growth rate of industrial profits in November this year.
Xu Hongcai, deputy director of the Economic Policy Committee of the Chinese Academy of Policy Sciences, told the 21st Century Business Herald that before the release of industrial profit data in November, a series of macro data such as industrial production, manufacturing PMI, corporate credit, and industrial prices have picked up, which is beneficial to industry. The positive factors of business operation are increasing. In his view, this is the result of a series of counter-cyclical adjustment policies.
"The improvement in November's profits will further boost the confidence of industrial enterprises, and once again confirm that the current economy is stabilizing and recovering. This is a good phenomenon. But this should not be too optimistic: the monthly profit growth rate from August to October this year They are both negative numbers. In November, the recovery in growth rate has not yet formed a trend of continued warming. Economic stabilization is still very fragile, while indicators such as PPI are still falling, and the economy is still under downward pressure. "Xu Hongcai said.
Private company profits up 6.5% in first 11 months
In view of different types of enterprises, from January to November, the total profits of state-owned holding companies reached 1,603.66 billion yuan, a decrease of 11.2% year-on-year; the total profits of joint-stock enterprises reached 40,482.3 billion yuan, a decrease of 1.6%; investment from foreign and Hong Kong, Macao and Taiwan businessmen The total profit realized by enterprises was 1,411.12 billion yuan, a decrease of 3.3%; while the private enterprises were called “outstanding”, with a total profit of 1,589.33 billion yuan, an increase of 6.5%.
In the month of November, the profits of private enterprises and small enterprises increased by 14.7% and 8.6% year-on-year respectively, and the growth rates were 9.9 and 5.6 percentage points faster than in October.
At the same time, the profit growth of state-owned holding companies and foreign-invested and Hong Kong, Macao and Taiwan-invested companies also turned from negative to positive. In November, the profit of state-owned holding companies increased by 0.6% year-on-year, reversing the trend of continuous decline since the second half of this year; Profits of investment companies increased by 3.5% year-on-year, and fell by 2.0% in October.
A person in charge of the Small and Medium Enterprises Bureau of the Ministry of Industry and Information Technology told 21st Century Business Herald that since this year, China has adopted a series of measures to reduce taxes and fees and clear accounts owed to private enterprises, which is expected to significantly improve the profitability of private enterprises and SMEs.
The National Conference on Industry and Information Technology held recently predicts that this year's tax and fee reduction will be 2.36 trillion yuan. Manufacturing and related sectors will account for nearly 70% of the scale of VAT reductions. The tax is about 250 billion yuan; the amount owed is expected to exceed 600 billion yuan.
It is reported that as of the end of November 2019, government departments at all levels and large state-owned enterprises have repaid over 580 billion yuan in arrears to private enterprises.
The 21st Century Business Herald recently learned from Yin Zhongqing, member of the Standing Committee of the National People ’s Congress and vice chairman of the National People ’s Congress ’Finance and Economics Committee, that in 2020, China will usher in a larger round of tax and fee reductions.
He said that China's tax and fee reductions were 620 billion yuan in 2016, 1 trillion yuan in 2017, and 1.3 trillion yuan in 2018. In 2019, a larger scale of tax cuts and reductions was implemented, involving 12 taxes such as value-added tax, corporate income tax, and personal income tax, and 19 fees such as endowment insurance and education surcharges, with unprecedented benefits and reductions.
"The cumulative increase in tax cuts and fees for the whole year of 2019 is likely to exceed 2.3 trillion yuan. In fact, VAT tax cuts were implemented on April 1st, and the social security rate was lowered on May 1st. The main fee reduction measures in July It only landed on the 1st, and it was only half a year by the end of the year. Even if no new policies were introduced, the scale of tax and fee reductions in 2020 would still be very large. "Yin Zhongqing said.
He pointed out that this year it is necessary to start research on reducing the nominal corporate income tax rate and increase the threshold. At the same time, the proportional tax rate system for interest, dividends, dividends, property leases and transfer income will be changed to a comprehensive progressive tax rate to reduce the overall level of tariffs.
Zhang Hangyan, deputy researcher of the Institute of Industrial Economics, Chinese Academy of Social Sciences, told the 21st Century Business Herald that according to his calculations, the overall cost of manufacturing has indeed declined, driven by policies such as tax cuts and fees. However, the cost cost, especially interest Expenditure is still high. "For example, from January to November, the cost per 100 yuan of operating income of industrial enterprises above designated size was 8.73 yuan, an increase of 0.23 yuan year-on-year, indicating that the pressure on manufacturing financing costs is still relatively large."
Profitability is expected to improve next year
In the first 11 months, of the 41 industrial sectors, the total profits of 28 industries increased year-on-year, and 13 industries decreased.
Zhu Hong pointed out that the growth rate of consumer goods manufacturing profits accelerated in November. The profits of the consumer goods manufacturing industry increased by 8.2% year-on-year, 3.1% faster than that in October. Among them, the profit of the food manufacturing industry increased by 32.5%, which decreased by 10.9% in October; the profit of the paper and paper products industry increased by 66.1%, an increase of 54.3 percentage points faster than that of October; the profit of the textile industry decreased by 11.4%, and the decrease was narrowed by 20.5 percentage points. .
Liu Xuezhi, a senior researcher at the Bank's Golden Research Center, pointed out that the CPI growth rate in November expanded to 4.5% year-on-year, an increase of 0.7 percentage point from October, which has driven the growth of consumer goods manufacturing profits, especially driven by rising food prices. Substantial growth.
Xu Hongcai said that the end of the year is the peak season for consumption of daily necessities such as food and clothing. The improvement of these data reflects the significant improvement in the demand for consumer goods manufacturing. At the same time, changes in retail methods have also affected abnormal fluctuations in some consumer goods data. A large number of packages will be generated in the month of e-commerce promotion, which may be one of the reasons for the substantial growth of the paper industry in November.
In addition, in November, the profits of the chemical raw materials and chemical products manufacturing industry decreased by 0.2% year-on-year, a sharp decrease of 151.5 percentage points from October; the profit of the petroleum, coal and other fuel processing industry increased by 45.5%, compared with a decrease of 31.2% in October; ferrous metal smelting He rolled processing industry profits fell by 16.3%, the decline narrowed by 48.0 percentage points.
Zhang Yali pointed out that the main reason for the narrowing of the steel industry's profit reduction is the drop in upstream iron ore prices. China's upstream iron ore is highly dependent on imports from Brazil and other countries. Ore prices. Therefore, this year's ferrous metal smelting and rolling processing industry continued to experience negative growth in profits, and recently iron ore prices have begun to fall, which has led to improved profits in the steel industry.
Xu Hongcai believes that the recovery of profits in steel and chemical industries is closely related to the development of infrastructure investment. Under the pressure of economic downturn, the latter is becoming an important means of countercyclical adjustment, which has brought about a recovery in demand for related products.
Looking forward to 2020, Zhang Yali believes that the efficiency of China's industrial enterprises is expected to gradually improve. It is expected that the profit growth rate of China's industrial enterprises above designated size will change from negative to positive in 2020, achieving a slight rebound.
She pointed out that on the one hand, all regions are actively carrying out quality improvement actions and holding conferences to promote the development of high-quality manufacturing, which will help enterprises improve product quality, enhance brand value, and enhance corporate profitability.
On the other hand, policies for promoting the development of small and medium-sized enterprises have been intensively introduced, and the effects of policies such as tax reduction and fee reduction and debt settlement of private enterprises are gradually showing. Next year, production and operating costs of enterprises will be effectively reduced, and profitability will be significantly enhanced.
Liu Xuezhi also said that considering that the cumulative profit growth of industrial enterprises this year continues to be a low base, it is more likely that the profit growth rate will return to positive growth next year, and the profit situation is expected to be better than this year.
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