Moreover, in July, the profit increased 11% YoY, which, as the second highest point since the beginning of this year, was 5.9 percentage points higher than that of June. And the reasons for the accelerating profit growth of the industrial enterprises in July can be concluded as follows:

First of all, sales growth of fine products has accelerated. In July, the price of industrial products picked up, and the Producer Price Index (PPI) of the month was 0.9 percentage point higher than that of June. As a result, the year-on-year increase of the main business revenue of the industrial enterprises above the designated size was 4.3%, which was 0.5 percentage point faster than that of June.

Secondly, the unit cost was further reduced in a large extent. In July, the cost of each RMB100 revenue from main business of enterprises was RMB86.08, reduced RMB0.42 YoY, which was RMB0.31 higher than the year-on-year decrease of June. Among each RMB100 revenue of the main business, the period expense was RMB7.34, reduced by RMB0.08 YoY, which was RMB0.03 higher than that of June.

Thirdly, the price of bulk commodity rebounded. Influenced by the changes over international market and the structural reform of domestic supply front, the price of steel and nonferrous metals rebounded recently, in addition to the obviously flat profit of the same period last year, the profit of steel and nonferrous metals industry significantly showed an upward trend this year. The manufacturer’s price of smelting and rolling processing of ferrous metals increased 2% YoY in July, but decreased 1.3% in June YoY. The industry profits, which increased RMB16.2 billion YoY, were RMB14.83 billion rather than the loss of RMB1.39 billion of the same period last year, while the year-on-year increase of the profit of June was RMB7.58 billion.

The manufacturer’s price of smelting and rolling processing of ferrous metals reduced 2% in July YoY, 4.1 percentage points lower than June in terms of decreasing amplitude. The industry profit increased RMB6 billion in July and RMB3.55 billion in June YoY. The two industries above altogether accelerated the profit growth of industrial enterprises above designated size by 2.8 percentage points in July, and the contribution to the accelerating profit growth of industrial enterprises above designated size was 47.5%.

Fourthly, the fall transferred to rise in terms of the profit of auto industry. Influenced by the downturn auto market and flat cardinal number of profit during the same period last year and huge reduction on the selling expenses among some large enterprises in July this year, the profit of automobile industry decreased 4% in June YoY, but increased 19% in July YoY, which accelerated the profit growth of industrial enterprises above designated size by 1.9 percentage points.

Fifth, the flat cardinal number was low of the same period last year. The profit of industrial enterprises above designated size reduced 2.9% last July YoY, 2.6 percentage points down compared to last June. The accelerating growth of the industrial profit this July was closely related to the flat cardinal number of the same period last year.

Generally, the changes among the profit of industrial enterprises have still been on a positive direction in July, with the year-on-year increase on the profit margin and the year-on-year decrease on the unit cost, moreover, the loss of the losing enterprises has obviously reduced, the inventory pressure has released, and the asset-liability ratio continued to decline. According to the statistics, the process of dissolving the excess capacity has been in a steady way. At the end of July, the asset of smelting and rolling processing of ferrous metal decreased 2.3% on year-on-year basis in total, which was 0.6 percentage point higher than that of June, continued the downtrend this year.

Although currently the profit growth of industrial enterprises has accelerated, the market demand has not obviously improved yet. At the same time, the problems of relatively longer payback time of receivables, the high speed of the growth of management cost, and the excess capacity have still existed and challenged the recovery of economic effectiveness among the industrial field.

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

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