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Intensifying supply-side reform is key to the rebounce of Industrial Prosperity Index

Submit Time:30-06-2016 | Zoom In | Zoom Out

Author:Pan Jiancheng | Source:Economic Daily


The Chinese Economy Industrial Prosperity Index in the first quarter this year is 91.9, equal to that in the first quarter last year. The industrial economy is generally operating steadily and shows the sign of bottom-up. Major indications are reflected in the following aspects : The PMI made an obvious rebounce to 50.2% in March, the first time for PMI to return to be above the entrepreneurs confidence threshold in nearly seven months ; in the first two months this year, total profit of industrial enterprises above the statistical threshold ended the declining trend for 7 consecutive months and showed restorative growth ; the year-on-year PPI turned to grow after continuous declining, particularly, the prices of resource product of steel and non-ferrous metals that dropped in large margins earlier showed the restorative growth. Among them, the factory price of iron and steel and non-ferrous metals in March increased by 4.9% and 2.3% year-on-year while the factory price of related iron ore and non-ferrous mines also increased by 3.6% and 2.7% year-on-year.

The reasons for the bottom-up of the Industrial Prosperity Index are: First, the continuous strengthening of the construction of infrastructure facility. The investment in the sectors of water conservancy, environment and public facility management, and aviation transportation keeps rapid growth. Second, the property market pickup. Affected by the gradual pickup of the transaction of property market, confidence in property market makes a turn. The area of newly operated commodity house early this year ended the declining trend for two consecutive years and turned to be back to the growth track. The year-on-year growth between January and March reached 19.2%. The growth of investment in property development also turned from nearly zero growth to the year-on-year growth of 6.2% between January and March. Third, the continuous upgrade of consuming structure and the rapid development of industries related to health and aging, self-development, and enhancement of living quality. In 2015, under the situation that the main business revenue of industrial enterprises above statistical threshold saw zero growth and their profits dropped by 2.2%, the main business revenue of pharmaceutical industry grew by 9.1% with a profit growth of 12.9% ; the main business revenue and profit of sports goods kept a growth of about 10% ; the output of the sport utility vehicle (SUV) that satisfies growing demand for outing and leisure tourism witnessed a year-on-year growth of 49.1% in the first quarter of this year. Fourth, the pick-up of demand for export. In March, cargo exports at the Customs rebounded by big margin. The decrease range of the value of export cargo from the industries above the statistical threshold narrowed an accumulation of 3.5 percentage points between January and February.

Under the situation that the economic aggregate steadily occupying the second in the world and per capita GDP approaching $8,000, the moderate decrese of the Industrial Prosperity Index is the necessary requirement for the growth to change gear after the economy enters the new normal situation. Currently, the foundation for the economic rebounce in the first quarter is not solid. The pressure for a downward economy is still great. For example, the global economic recovery is still greatly uncertain. The recent property market rebounce will not necessarily last long under the pressure of enormous stockpiles. To consolidate the foundation for economic growth, the supply-side reform should be strengthened during the transitional period of the driving forces of the old and new economic growth and cultivate new driving forces for growth. Specifically, to cultivate the new driving force for economic growth in 2016, the following aspects should be stressed.

First, firmly push forward the guideline of overcapacity reduction and the reduction of unsold homes, firmly dispose of the zombia companies and bring new vitality to the economy through properly disposing of some assets and promote the rebirth of some industries and enterprises in difficulties.

Second, continue to reduce the cost of enterprise. It will effectively improve supply environment, expand profit rooms for enterprises and enhance the confidence of enterprises by means of further reducing taxes, fees and actively implementing the policy of reducing the proportion of social security charges for enterprises.

Third, combine the bolstering areas of weakness with stabilizing growth. For example, to win the battle of poverty alleviation can be transformed into impetus for growth. To promote consumption growth by eradicating poverty for more than 10 million people. Another example is to drive economic growth by green development. In 2015, the fact that the output of new energy automobile grew by 1.6 times over the previous year is an encouraging direction. Ecological environment protection and treatment investment increased by 24.2% in 2015 and the growth rate reaching 37.8% between January and February in 2016 demonstrated the vitality of green development in terms of environmental protection.

Fourth, grasp the impetus of industrial internal structure upgrade. In the first quarter, the strategic emerging industries increased by 10%, the hi-tech industry increased by 9.2% and the output of industrial robots increased by nearly 20%. From one aspect, it reflects the structural upgrading of the traditional industries. In particular, it is the demand of automation upgrading of machine substituting people ; the IT equipment manufacturing investment increased 13.4%, distinctively high than the growth of 6.4% in the manufacturing sector, indicating that the industrial upgrading driven by informatization will gain further momentum.

Fifth, actively push forward the development of capital market, increase the direct financing proportion of enterprises, and strengthen the service of financial sector to the entity economy while reducing the leverage rate of enterprises.

Sixth, give full play to the important role of the three national strategies of developing “Belt and Road” initiave, co-ordinated development of Beijing, Tianjin and Hebei region, and the Yangtze River Economic Belt in driving economic growth.

(Author : Deputy director of China Economic Prosperity Supervision Center of the National Bureau of Statistics)

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