MIIT: Industrial Economy Run Smoothly in H1, Capacity of Steel Industry has still been in Absolute Excess 08-22-2016

The State Council convened press conference on the afternoon of 25th July, during which Feng Fei, deputy minister of Ministry of Industry and Information Technology (MIIT), introduced the development of the industry and communications in H1 2016. The year-on-year growth of the industrial added value in national scale was 6% in H1, according to Feng, the industrial economy run smoothly in H1, while from the perspective of relation of market supply and demand, the steel industry has still been in absolute excess.

 


 Source: Internet

According to Feng Fei, the growth of industrial production has gradually stabilized, and among the 6% of the industrial added value in H1, 5.8% was increased in Q1 and 6.1% in Q2. In 41 industrial industries, 19 of which are mostly manufacturing industries, grew faster in terms of industrial added value in Q1 than that of Q2.

 

The benefit of industrial enterprises has improved. From January to May, the major business income of the enterprises above designated size rebounded by 0.5 percentage point compared with that of last quarter, among which the profit increased by 6.4% and thus changed the situation of continuous negative growth in last year. And among all those 41 industrial divisions, 33 of which enjoyed an increased or flatted year-on-year growth in terms of total profit.

 

Industries of high technology and high-speed of transformation and upgrading was in a smooth operating situation. In H1, the growth of high-tech industry was 4.2 percentage points higher than the overall industrial growth, and the added value of the equipment manufacturing industry increased by 2.1 percentage points YoY. Light industry and textile industry, which enjoyed a smooth operating situation, have positively developed more categories, improved products quality, and established new brands so as to adapt to the changes from the consumption upgrading.

 

Moreover, the effects of structural reform of supply front in the industrial field began to emerge. In terms of the de-capacity, the steel industry resolved the excess capacity and stepped into a new phase to accelerate the implementation: the operating situation of the steel industry has improved with the output of crude steel of H1 reduced by 1.1% YoY; in terms of reducing cost, the cost of major business income of the enterprises above designated size in the previous five months bottomed among the past three years due to the reduction of the deposit reserve ratio and interest rate, expenditure settling, and tax cut that promoted the cost-reduction and profit-improvement of enterprises.

 

In terms of the remedy of short slab, the technical transformation engineering of manufacturing industry, the foundation reinforcing engineering of industry, green-manufacturing engineering, and significant innovation engineering of big data have all contributed to the industry  transformation and upgrading from the traditional industry with the growth of technology investment of 14.5% in H1. Moreover, the communication industry has also realized smooth increase. During the H1, the revenue of basic telecommunications business increased by 5.6% YoY, while the growth of the added value of communication business increased 18.6%.

 

Generally, the industrial economy presented a stable running situation with the help of a series of policies released by the central government, according to Feng Fei, the operating situation of most areas, industries, and enterprises has improved with the effects of the policies. The positive factors have gradually gathered and the adjustment over industrial structure has been promoted steadily, and thus established a good foundation for achieving the overall goals all around the year.

 

However, during the first half year, industrial operating can be characterized by flat, stabilized, improved, but also somewhat difficult. “Flat and stabilized” was presented by the stabilized growth of the industrial added value of enterprises above designated size, which basically corresponding to the expected growth target of 6% proposed in H1, the obvious improvement of the profit of industrial enterprises, the continuous narrowing of the decrease of Producer Price Index (PPI), the Purchasing Managers Index (PMI) of manufacturing industry remained above the manufacturing gauges for continuous four months, and more and more obviously positive economic phenomenon.

 

“Stabilized and improved” was showed by the accelerating growth of high-tech manufacturing industry (which has already accounted for 12.1% of the manufacturing industry), the transformation and upgrading of traditional industries, and the preliminary effects of de-capacity and remedy of short slab.

 

“Improved and somewhat difficult” was showed by the generally weak effective demand, since the export continued downturn and the investment growth reduced (especially in the industrial field, only had 4.2% of growth) during the H1, moreover, the growth of private investment was only 2.8%. The complete conversion from the old kinetic energy to the new remains to be further develop, and the downward pressure of some areas and industries are relative huge.

 

Previously, the de-capacity of steel industry has all the way been concerned by different social sectors. The No.6 Document issued by State Council confirmed that the industry would resolve the excess capacity and thus to get out of the trouble of surplus and develop its business with the goal of 140 million tonnes of capacity reduction in the next five years, among which the target of this year is 45 million tonnes.

 

From the preliminary estimate, according Feng Fei, the amount of de-capacity of steel industry in the H1 this year amounted to 13 million tonnes, which accounted for about 30% of the overall target this year. Generally, the major works of H1 is to deploy the tasks, arrange the assignments, and formulate the relative policies, while during the H2, it should focus on putting the plan into force and thus to substantially propel the process of de-capacity.

 

“From the perspective of the relationship of market supply and demand, the steel industry has still been in the absolute excess, rather than relative overcapacity,” said Feng Fei, “and thus we should unswervingly carry forward the de-capacity. As for the present progress and the measures we have taken, we’ve already given the specific introduction.”

 

*This article is edited and translated by CCM. The original one comes from Jiemian.com.

 

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