Industrial data show that China’s economic transformation has achieved initial success

The National Bureau of Statistics announced on the 27th that profit figures for industrial enterprises above designated size in 24 provinces from January to July were realized. Combined with the data on industrial added value above designated size released in the middle of the month, it can be found that although the year-on-year growth rate of industrial added value and industrial profits above the scale of our country has fallen in recent months, the different performance of light and heavy industries shows that our industry has begun to gradually get rid of the past. Depends on the expansion of the expansion of production capacity.

From January to July, profits of industrial enterprises above designated size in China's 24 provinces increased by 61.1% year-on-year, an increase of more than 10% from January to June; and the main business income of industrial enterprises above designated size increased by 34.7% year-on-year in 24 provinces. From January to June, it dropped 1.8 percentage points. These 24 provinces refer to mainland provinces except Inner Mongolia, Hunan, Guangdong, Hainan, Chongqing, Yunnan, and Tibet. According to the National Bureau of Statistics, the publication of this data is "to facilitate the public's observation of changes in industrial economic performance and to grasp the changing trend of industrial economic returns in each month."

Combined with the industrial value-added data, it can indeed be seen that there are some new changes in the overall situation of China's industry. Shanghai Securities observed from the perspective of light and heavy industry that after the first quarter of this year, the increase in the value added of China's heavy industry dropped significantly, while that of light industry increased basically stable. In particular, from the month-on-year growth rate of industrial added value in July, the light industry, which mainly produces consumer goods, showed a steady growth year-on-year, while heavy industry’s year-on-year growth rate showed a drop. As the value added of heavy industry such as non-ferrous metals, steel, and chemical industries accounted for a large proportion of the total industrial value added, the dragging down of industrial added value showed a year-on-year decline.

The big reason for the drop in the year-on-year increase in the value added of heavy industry is that China has stepped up efforts to limit the development of the “three high” industries such as high energy consumption this year. Expected to be subject to industrial and credit policy restrictions, as well as the intensification of real estate regulation, the year-on-year data for heavy industry added value will continue to maintain a slow downward trend. However, because the country is aware of the risk of a downturn in the economy, it will certainly adopt a series of macroeconomic policies to stimulate investment and consumer demand, thus stimulating the growth rate of related heavy industries, and the downward trend may be slowed down in the future.

Shanghai Securities said that the increase in the value added of heavy industry dropped, and the light industry remained stable or even slightly increased. This shows that the improvement of China's industrial added value and profit growth began to gradually get rid of the epitaxial growth mode that relied on capacity expansion in the past. This is in line with the overall policy idea of ​​energy conservation and emission reduction, and will bring greater market demand to emerging industries such as China's new energy, new materials, and energy-saving emission reduction industries.

In addition, from the perspective of various sub-industry industries, the profits of the upstream resource industry have grown faster. Among them, oil and natural gas, ferrous metal mining, chemical fiber manufacturing, ferrous metal smelting and rolling processing, non-ferrous metal smelting and rolling processing saw the fastest growth. Shanghai Securities analysts believe that this is mainly due to the background of industrial restructuring, large-scale resource companies have embarked on the road of integration and restructuring, and enhance the overall competitiveness of enterprise groups. It is expected that with the rise of regional city circles and the consolidation of coal resources in many provinces, the profits of upstream resource product manufacturers in the fourth quarter will continue to maintain a good momentum of growth.