In July 2019, China’s industrial profits increased by 2.6% year-on-year

  According to the financial data of industrial enterprises released by the National Bureau of Statistics of China on August 27, the total profit of industrial enterprises above designated size increased by 2.6% in July, an increase of 5.7 percentage points from June. From January to July, the accumulated profit decreased by 1.7% year-on-year, and the decline was 0.7 percentage points lower than that in January-June. In the case of the first production price index (PPI) in July, which turned negative for the first time in three years, it is not easy to achieve a year-on-year growth in the profit growth of industrial enterprises in July.

  Petrochemical, electrical machinery, chemicals, and automobiles are the main industries that drive the growth rate of profits of industrial enterprises in July from negative to positive.

  Data show that in July, the profit of the petroleum processing industry decreased by 28.1% year-on-year, but the decline was sharply narrowed by 49.3 percentage points compared with that of June; the profit of the electrical machinery industry increased by 30.8%, the growth rate accelerated by 26.6 percentage points; the profit of the chemical industry increased by 3.2%. In June, the decline was 14.7%; the profit of the automobile manufacturing industry fell by 9.2%, and the decline narrowed by 7.0 percentage points.

  What factors have positively affected the growth rate of these four industries?

  According to Zhu Hong, senior statistician of the Industry Department of the National Bureau of Statistics, the petroleum processing industry is mainly affected by the disposal of assets and the fall in crude oil prices; the electrical machinery industry is mainly affected by the rebound in sales and the low base in the same period; the chemical industry is subject to substantial investment income. Increased impact; the automotive industry is mainly affected by the low base of the same period.

  "The above four industries have combined to affect the profit growth rate of all industrial enterprises above designated size by 5.3 percentage points from June." Zhu Hong said.

  Due to sluggish market demand, China's auto manufacturing industry's profit fell sharply by 24.9% in the first half of the year. However, the auto industry weekly report released by Lianxun Securities believes that with the end of the country's Wuqing inventory and the arrival of Jinjiuyin 10, the turning point of the industry will accelerate. Industry valuations have bottomed out and can actively position the automotive industry.

  It is worth mentioning that the profit growth rate of the consumer goods manufacturing industry has obviously accelerated, and the profit growth rate of the equipment manufacturing industry has turned from negative to positive.

  According to data released by the National Bureau of Statistics, in July, the profit of consumer goods manufacturing increased by 10.0% year-on-year, and the growth rate was 7.4 percentage points higher than that of all industries above designated size, 6.1 percentage points faster than that in June. Among them, the profit of food manufacturing industry increased by 21.5% year-on-year, down 4.9% in June; the profit of agricultural and sideline food processing industry increased by 25.4%, and the growth rate was 18.6 percentage points faster than that in June.

  In the current complex and ever-changing economic environment, the transformation and upgrading of the manufacturing industry continues to advance, and not only the consumer goods manufacturing industry, but also the equipment manufacturing industry has further enhanced its role in promoting economic growth.

  It is also a bright spot for the equipment manufacturing industry to increase its profit growth from negative to positive. According to the data, in July, equipment manufacturing profit increased by 4.8% year-on-year, the growth rate was 2.2 percentage points higher than that of all industries above designated size, and it was down by 1.1% in June. Among them, in addition to the rebound in the profit growth rate of the electrical machinery and automobile industry or the decline in the decline, the profit of the metal products industry increased by 21.8% year-on-year, and decreased by 0.7% in June.

  In July, the growth of industrial profits also showed that the growth rate of private enterprise profits has rebounded sharply, and the operating conditions of enterprises have improved.

  According to the National Bureau of Statistics, in July, private enterprise profits increased by 11.4% year-on-year, and the growth rate was 9.7 percentage points faster than that in June.

  Since 2019, with the implementation and implementation of a series of policies such as tax reduction and fee reduction, the vitality of private enterprises in China has been continuously enhanced. In terms of industrial added value, from January to July, the added value of private enterprises increased by 8.5% year-on-year, which was 2.7 percentage points higher than that of all industries above designated size, and also 2.7 percentage points higher than the same period last year.

  In addition, the company's operating conditions improved in July, mainly reflected in two aspects. First, the inventory turnover of finished products has accelerated. At the end of July, the inventory turnover days of finished products of industrial enterprises above designated size were 17.2 days, a decrease of 0.2 days compared with the same period of last year. Second, the leverage ratio continues to decrease. At the end of July, the asset-liability ratio of industrial enterprises above designated size was 56.8%, down 0.5 percentage points year-on-year. Among them, the asset-liability ratio of state-owned holding companies was 58.3%, down 1.1 percentage points year-on-year.

  Zhu Hong said that although the profit growth rate of industrial enterprises in July turned from negative to positive, the downward pressure on the economy was relatively high, market demand slowed down, industrial prices fell, and the volatility and uncertainty of industrial enterprise profits still existed, which promoted the stability of corporate profits. Growth still needs to be done.

  Experts predict that in the future, China's industrial production will still face many uncertainties, and enterprise production will slow down. However, due to the base reason and tax reduction and fee reduction policies, the company's operation is expected to continue to improve.