Investigation and Analysis of the Operational Benefits of China's Industrial Enterprises in the First Half of the Year
May 06 10:20:50, 2023
There are many reasons for the significant decline in the operating efficiency of this round of enterprises, both cyclical and short-term factors, as well as trending and long-term factors. From the current situation, cyclical and short-term factors are the direct causes of business difficulties, but long-term, trend-changing changes are fundamental issues affecting operational efficiency. The slowdown in both domestic and international market demand growth is the direct cause of the decline in corporate profits. The international economic downturn has led to a sharp decline in export growth rate, which is both a cyclical economic phenomenon and a direct cause of difficulties in export-oriented enterprises. Since 2002, China’s export growth rate has been above 20% for most of the years. However, since the financial crisis, due to the weak recovery of the US and Japan markets, the Eurozone has been deeply affected by the European debt crisis. The growth rate of demand for imported goods by developed economies has slowed down significantly, which has greatly affected China's exports. From January to July 2012, China's export growth rate was only 7.8%, down 15.6 percentage points from the same period last year. Although the sharp decline in China's export growth rate since 2012 is due to external factors such as the European debt crisis and the slow recovery of the international economy, it also reflects the fact that the low-cost advantages of some labor-intensive products are gradually disappearing and exporting enterprises. Lack of core competitiveness, high market share of some products and limited space for further growth, the slowdown in the growth rate of corporate exports has certain inevitability. From the perspective of domestic market demand, due to the slowdown in infrastructure construction and real estate development investment, the growth rate of domestic investment demand will directly decline in the short term. Since 2010, the growth rate of investment in railways and highways has fallen sharply, which is one of the important factors that have contributed to the decline in the growth rate of fixed asset investment. Among them, from January to June 2012, railway investment decreased by 36.9% compared with the same period of last year, and road investment was flat with the same period of last year. From the perspective of real estate development investment, from January to June 2012, the cumulative growth rate was 16.6%, which was significantly lower than the level of 20.9%-30.2% in 2004-2008, only slightly higher than the 16.1% in 2009. It is worth noting that although railway investment is affected by accidental factors such as high-speed rail accidents, the decline in the growth rate of investment in transportation facilities, especially road investment, and the decrease in the proportion of total investment has become a continuing phenomenon since 2003. In 2003, road investment accounted for 7.9% of total investment. In 2004, it fell to 7.5%. By 2008, it had dropped to 5.0%. Although it rebounded to 5.4% in 2009, it has been declining for three consecutive years since 2009. The year is 4.5%. Since road investment does not have the problems and causes of railways, it actually reflects the important trend of gradually improving China's infrastructure and slowing down the growth of related investment. Overcapacity in many industries is an important reason for the decline in operating efficiency. Overcapacity is a long-standing problem in China's economic development. In the case of slowing market demand, excessive competition, especially homogenous price competition, is caused by overcapacity. It is easy for companies to adjust sales prices as costs increase, which can easily lead to large-scale losses. In industries with large fixed assets, such as steel and petrochemical industries, this has a particularly significant impact on corporate profits. Since 2003, China's investment rate has been maintained at a historically high level and continues to climb. In 1993, China’s fixed assets investment accounted for 42.6% of GDP, which was the highest since 1959 when the country was founded. Since 2003, the investment rate has remained at a high level of around 41.5%, and has even increased from 2008 to 2008, and has reached 49.2% in 2011. Driven by high investment rates, China's production capacity in many industries continues to expand. In recent years, overcapacity industries have gradually expanded from steel, electrolytic aluminum, cement and automobile industries to coke, calcium carbide, ferroalloy, coal, copper smelting, textile, chemical fiber, etc. Several industries. In recent years, due to the different levels of strategic emerging industries identified by the local governments as key local development industries, a large amount of investment has been further infiltrated by central and local industrial promotion policies, and overcapacity in some emerging strategic industries has also At the beginning, carbon fiber, wind power, polysilicon, lithium batteries, photovoltaics, etc. have successively experienced structural overcapacity. In fact, overcapacity is not just a problem that has existed in recent years. The overcapacity problem in the past few years has not been very prominent. On the one hand, due to the rapid development of foreign trade exports, some of the production capacity has been digested. On the other hand, in recent years, a considerable part of fixed assets investment has been invested in real estate and infrastructure, etc. The field of capabilities has relatively slowed the pace of capacity expansion. However, since 2012, due to the slowdown in the growth of external demand and the decline in the proportion of real estate and infrastructure investment, the problem of overcapacity has suddenly emerged. Overcapacity causes companies to increase their prices when they are rising in costs, and even keep a small profit or a loss to maintain market share. As a result, profits have fallen sharply, and companies have been in a difficult business situation. In the market economy environment, a certain degree of overcapacity is a normal economic phenomenon, but China's overcapacity problem is more prominent, and some are caused by systemic reasons. First of all, China's fiscal and taxation system is based on indirect taxes. The characteristics of this system are that there are taxes in production, and consumption and property income contribute less to government revenue. Local governments have limited economic means to attract investment. They often compete with each other on land and tax incentives and lower environmental protection requirements. This actually reduces the investment cost of enterprises and has greater incentives for investment than the real market environment. Secondly, in the current rapid economic growth process, the state-owned enterprises have greatly enhanced their economic strength. The enterprises retain a large amount of profits and have less turnover and distribution, mainly for investment and development. In recent years, some places have shifted the focus of attracting investment from foreign investment to large state-owned enterprises.