As macro policy combinations take effect, market demand continues to recover, industrial production grows rapidly, and the benefits of large-scale industrial enterprises have seen significant improvement.
Data released by the National Bureau of Statistics on March 27th shows that from January to February, the profits of national large-scale industrial enterprises increased by 10.2% year-on-year, reversing the decline of 2.3% for the whole of the previous year to positive growth. On a monthly basis, the profits of large-scale industrial enterprises have been growing year-on-year since August of last year, and from January to February of this year, they continued to show a positive recovery trend, with the benefits of industrial enterprises starting steadily.
It is worth mentioning that among large-scale industrial enterprises from January to February, the profits of private enterprises grew by 12.7%, which is 10.7 percentage points higher than the full year of 2023. Recently, several indicators related to the private economy have shown positive improvements. For example, the export growth of private enterprises reached 19.2% from January to February, private investment increased by 0.4% year-on-year, turning from negative to positive growth, and private investment in manufacturing grew by 11.6%, reflecting that a series of policy measures to promote the development and growth of the private economy since last year are taking effect.
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Recently, the National Development and Reform Commission held a meeting in Wenzhou, Zhejiang, to promote the development and growth of the private economy. Deputy Director of the Commission Zhao Chenxin stated that in conjunction with relevant departments, they will closely follow the changes in the macroeconomic situation and the actual development of the private economy, and accelerate the implementation of a number of practical measures in areas such as market access, access to factors, fair law enforcement, and rights protection.
The profit growth rate of industrial enterprises has turned from negative to positive.
With the continuous recovery of market demand and the rapid growth of industrial production, the revenue growth of industrial enterprises has significantly accelerated. From January to February, the operating income of large-scale industrial enterprises increased by 4.5% year-on-year, which is 3.4 percentage points higher than the revenue growth rate for the whole year of the previous year. The revenue rebound trend is obvious, creating favorable conditions for profit growth.
Looking at the industry, more than 70% of the industries saw profit growth, with manufacturing and electricity, water, and gas industries growing faster. From January to February, among the 41 major industrial categories, 29 industries saw year-on-year profit growth, with a growth rate of 70.7%, which is 4.8 percentage points higher than the full year of the previous year. In terms of categories, the profits of manufacturing, electricity, heat, gas, and water production and supply industries increased by 17.4% and 63.1% respectively, both achieving double-digit growth; the profits of the mining industry decreased by 21.1%.
In the manufacturing sector, as the modern industrial system is being accelerated, the profit growth of the equipment manufacturing industry continues to accelerate. From January to February, the profits of the equipment manufacturing industry increased by 28.9% year-on-year, which is 24.8 percentage points faster than the full year of the previous year, driving the growth of large-scale industrial profits by 6.7 percentage points, with a contribution rate of 65.9%, making it the industry sector with the largest contribution.
As the manufacturing industry moves towards high-end, intelligent, and green development, the profits of high-tech manufacturing have also seen rapid growth. From January to February, the profits of high-tech manufacturing turned from a decline of 8.3% for the whole year of the previous year to a growth of 27.9%, which is 17.7 percentage points higher than the average level of large-scale industrial enterprises. Among them, the profits of the smart consumer equipment industry grew by 1.13 times, the profits of the lithium-ion battery industry grew by 66.3%, and the communication terminal equipment industry turned from a loss in the same period of the previous year to a profit of 13.97 billion yuan.
In addition, benefiting from the improvement of domestic and foreign demand, coupled with the strong driving force of the Spring Festival holiday, consumer demand has steadily recovered, and the profits of the consumer goods manufacturing industry have grown rapidly. From January to February, the profits of the consumer goods manufacturing industry turned from a decline of 1.1% for the whole year of the previous year to a growth of 12.9%. Among the 13 major consumer goods manufacturing industries, 11 industries saw profit growth.The National Bureau of Statistics' Industrial Department statistician Yu Weining analyzed that, overall, the profits of large-scale industrial enterprises grew rapidly in January and February, starting steadily. In the next stage, efforts should be made to promote the construction of a modern industrial system, accelerate the development of new quality productive forces, focus on expanding domestic demand, stimulate the vitality of various business entities, continuously consolidate and strengthen the upward trend, and strive to promote the effective improvement of quality and reasonable growth of the economy.
Regarding the trend of industrial profit growth in the next stage, Gao Ruidong, Chief Economist of Everbright Securities, said that under the support of multiple positive factors, industrial enterprise profits are expected to continue to recover. In terms of base numbers, in the first half of 2024, the pressure of profit base numbers for industrial enterprises is relatively light overall, and the low base number effect will continue to support the improvement of year-on-year profit growth. In terms of domestic demand, a series of stable growth policies are continuously taking effect, which is conducive to consolidating and strengthening the upward trend of the economy. In terms of external demand, the global commodity trade growth rate in 2024 is expected to rebound slightly, and the pressure of external demand contraction faced by China's exports will improve marginally.
Wen Bin, Chief Economist of Minsheng Bank, also believes that industrial enterprise profits are expected to rise gradually. From the perspective of policy, many measures from the central economic work conference at the end of last year are related to promoting industrial development, including leading the construction of a modern industrial system with technological innovation on the supply side, and "stimulating potential consumption and expanding effective investment" on the demand side. Since the beginning of this year, fiscal policy has been ahead of schedule, and the central bank has unexpectedly lowered the reserve requirement ratio, both of which have created favorable conditions for industrial production.
Wen Bin also said that from the perspective of quantity, domestic demand is gradually recovering, and external demand is showing a soft landing trend, which is conducive to boosting corporate confidence and increasing production willingness. The growth rate of industrial added value is also expected to continue to rebound. From the perspective of price, the pressure of raw material costs has eased, and it is expected that the unit cost of enterprises will still remain at a historically low level, and low costs will also help to lift the profits of industrial enterprises.
A report released by the National Economic Research Center of Peking University believes that industrial demand is steadily recovering, industrial enterprise profits are improving, the industrial economy is at the end of passive inventory reduction, and stable growth policies continue to take effect. It is expected that with the easing of upstream cost pressures and the effective stimulation of downstream demand, the industrial economy is expected to continue to recover.
The continuous improvement of industrial profits is inseparable from the continuous strengthening of industrial stable growth policies. Zhao Zhiguo, spokesperson for the Ministry of Industry and Information Technology and Chief Engineer, said on the 26th that the external environment faced by the industrial economy this year is still severe and complex, but China's industrial economic development has strong resilience and potential. In the next stage, efforts will be made from four aspects: stable growth, expanding demand, cultivating momentum, and optimizing the environment, to continuously consolidate and strengthen the upward trend of the industrial economy. Continue to focus on the growth guidance of the top ten key industries and give full play to the role of large industrial provinces and cities in "taking the lead". Guide localities to increase the intensity of stable growth efforts, encourage the development of characteristic advantage industries according to local conditions, and strengthen the basic plate of the industrial economy.
Promote the implementation and effectiveness of measures to promote the development of the private economy.
Data shows that since the beginning of the year, profits of the main types of economy and enterprises of different sizes have increased. In January and February, among large-scale industrial enterprises, the profits of state-controlled enterprises increased by 0.5% year-on-year, the profits of private enterprises increased by 12.7%, and the profits of foreign and Hong Kong, Macao, and Taiwan-invested enterprises increased by 31.2%; the profits of large, medium, and small enterprises increased by 8.0%, 6.0%, and 18.9% respectively.
The rapid growth of private enterprise profits reflects the implementation and effectiveness of a series of measures to promote the development and growth of the private economy since last year. After the establishment of the Private Economic Development Bureau last year, private economy special work institutions have been established in various places. This year, many places have focused on the development of the private economy in the "first meeting of the new year" for research and deployment. The Private Economic Promotion Law is being studied and formulated, and many places are actively studying relevant regulations and regulations, and an environment that is increasingly conducive to the development of the private economy is being formed.
In fact, recent macro data reflecting the development of the private economy is improving. In January and February, the export growth of private enterprises in China reached 19.2%, which is 8.9 percentage points faster than the overall export growth rate. Private investment increased by 0.4% year-on-year, and the growth rate turned positive from negative. Private investment in the manufacturing industry increased by 11.6%, which is 2.2 percentage points higher than the total investment in the manufacturing industry. Wei Dong, Director of the Private Economic Development Bureau of the National Development and Reform Commission, said that overall, the supply and demand indicators of the private economy are changing positively and are improving.Wei Dong revealed that the Private Economy Development Bureau is establishing a monitoring index system for the development situation of the private economy, closely monitoring and promptly promoting the resolution of significant emerging and tendentious issues. The goal is to transition from solving individual problems to addressing a category of issues, benefiting a group of enterprises and aiding the development of an entire industry.
Liu Sushe, the Deputy Director of the National Development and Reform Commission (NDRC), mentioned at a press conference held by the State Council Information Office on the 21st that private investment is a very important foundation for the development of the private economy and also serves as a "barometer" for the vitality of the private economy. Efforts will be intensified and more practical measures will be taken to promote the development of private investment, focusing on stabilizing and expanding it, and striving to maintain a stable growth trend. There will be a push for localities and related industries to implement new mechanisms for cooperation between the government and social capital, to manage and utilize the private investment guidance special funds within the central budget investment effectively, and to encourage private enterprises to participate in the construction and operation of infrastructure and other projects to the greatest extent.
From March 21 to 22, the NDRC held a field meeting in Wenzhou to promote the growth and strengthening of the private economy. This was the third field meeting convened by the Private Economy Development Bureau since its establishment last year.
Zhao Chenxin stated at the meeting that last year, China's economy rebounded and improved, with a full-year growth of 5.2%. In the first two months of this year, China's economy started well, with production and demand steadily rising, overall stable employment and prices, and continuously improving development quality. Leading indicators and physical quantity indicators in key areas all showed a stable upward trend, and the economy continued to maintain a stable and positive momentum, which is a strong support for the continuous forward development of the private economy.
Zhao Chenxin emphasized the need to continuously strengthen systemic linkages and improve service levels, to accelerate the construction of a comprehensive service platform for the development of the private economy, and to guide regions to continuously improve and establish a normalized communication and exchange mechanism with private enterprises. It is also important to continuously strengthen government-enterprise interactions and unblock communication channels, to hold field meetings to promote the development of the private economy regularly, and to continuously strengthen inter-departmental and inter-regional government-enterprise linkages.
Dong Yu, the Executive Vice President of the China Development Planning Academy at Tsinghua University, believes that the overall environment for the development of China's private economy is continuously improving, including the policy environment, public opinion environment, and legal environment. The vitality of private enterprises is now steadily recovering, and the private economy is showing a rebound and an upward trend, which is synchronized with the overall economic recovery. It is believed that in 2024, the private economy will face fewer constraints and receive more encouragement and support, allowing the private economy to be more agile and accelerate its development.