Industrial companies with annual revenue of more than 20 million yuan reported 3,633.75 billion yuan during January and June, representing a year-on-year growth of 22 percent. Their profits reached 727.78 billion yuan in June, up by 19.1 percent year on year and 2.4 percentage points faster than that in May, the National Bureau of Statistics (NBS) said in a statement. Experts said that China’s economy registers a stable performance with good momentum for growth and witnesses many positive changes since this year. The country should keep consistency and stability of macro-policy and implement proactive fiscal policy and prudent monetary policy so as to ensure steady and healthy development for economy in the second half of 2017.
Positive changes take place in economic situation
“The economy grows stably in the first half of this year.” Yang Weimin, deputy head of the Office of the Central Leading Group on Finance and Economic Affairs indicated that the economic operation was quite steady as major indicators were within reasonable range and even better than expected in the first six months. Secondly, economic development enjoyed improvement in quality and efficiency with an increase of 9.8 percent in fiscal revenue and 22 percent in industrial profits. Thirdly, 7.35 million people were newly employed in cities and towns, up by 180,000 year on year.
In the opinion of Yang, in the medium and long term, China’s economic development is showing positive changes; economic fundamentals don’t change; relation between supply and demand sees substantial changes; expectation of enterprises and market confidence are being improved gradually; and impetus for economic development is strengthening. These will boost not only China’s economic growth but also recovery of global economy.
Cong Liang, an official with National Development and Reform Commission (NDRC), noted that since the second half of last year, all the positive changes in the economy took place amid the ongoing structural improvement and was a result of vigorously promoting mass entrepreneurship and innovation and vitalizing real economy. Meanwhile, structural adjustment and switch of old and new growth driver were accelerated to advance economic development. Specifically, the whole industrial structure is optimized continuously and the second industry registers improvement in quality amid stable performance. Besides, demand structure also changes with consumption taking a leading role.
Profits of industrial enterprises stay steadily
“Business operation of industrial enterprises has been improved significantly as supply-side structural reform was promoted, relation between supply and demand in industrial field got bettered, and prices of industrial products picked up steadily." NBS spokesman Xing Zhihong remarked that performance of enterprises maintained the positive change in June.
First of all, industrial companies with annual revenue of more than 20 million yuan grew by 19.1 percent year on year in June, 2.4 percentage points and 5.1 percentage points higher than that in May and April respectively. Their profits gained by 22 percent year on year during January and June, 15.8 percentage points faster than that in the same period of last year. Secondly, year-on-year growth of profit rate continued to climb. Profit rate of revenues of these enterprises posted 6.35 percent in June, up by 0.29 percentage points from a year earlier. Thirdly, further improvement was seen in profit structure. A new change took place since the second quarter that contribution of upstream industries to the profit growth declines gradually, while that of middle and downstream industries and hi-tech industry keeps increasing.
Xing introduced that there are three major reasons for the positive changes in industrial profits. First, market demand developed stably and product sales surged. Second, cost reduction by cutting tax and expenses took effect continuously. Third, industrial transformation and upgrading and optimization in supply strengthened profitability of industrial enterprises.
Keep on seeking improvement amid stability
According to Yang, the central government stressed that it should hold on to the keynote of striving for progress amid stable performance in the second half of this year. This is an important principle of managing state affairs as well as a methodology of doing well in economic work.
Yang introduced that China should keep consistency and stability of macro-policy, implement proactive fiscal policy and prudent monetary policy, focus on supply-side structural reform, expand total demand, strengthen guidance on expectation and deepen innovation. It should also ensure that economy achieves stable and sound development, supply-side structural reform is deepened, and no systematic financial risk occurs.
Zhang Bin, senior researcher with China Finance 40 Forum, predicted that economic prosperity will continue in the next one or two quarters. One the one hand, sales in real estate and automobile industries are under early stage of cyclical downward trend. On the other hand, despite slowing down, growth rate of various macro-economic indicators stayed at high level. Production, performance of enterprises, investment and labor market keep better impetus.
Zhang believed that risks and uncertainties that the economy faces recently are not severe. The major risks lie in some unsustainable corporate debts. Pressure that forces enterprises to reduce leverage is limited under the background with good economic prosperity and corporate earnings.
Translated by Vanessa Chen
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