Scale enterprise profits turn positive and consumption booms

Domestic demand is strong and needs to be further tapped, which is enough to become the base gas for China's economy to resist downward pressure. This is the unique resilience of China's economy. Financial data of industrial enterprises released by the National Bureau of Statistics on August 27 show that in July 2019, the total profits of Industrial Enterprises above the national scale increased by 2.6% compared with the same period last year, and fell by 3.1% in June. Accumulated profits in January-July fell by 1.7% year-on-year, a decrease of 0.7 percentage points compared with January-June.

Although the cumulative profit in January-July is still in the decline channel, with a decline of 1.7%, it can be seen that the decline continues to narrow, 12.3 percentage points narrower than that in January-February, the largest decline since this year, and 0.7 percentage points narrower than that in January-June. This indicates that the operation of Industrial Enterprises above the scale has improved significantly, the momentum of profit decline has basically eased, and the operation of enterprises has been greatly improved.

In fact, the decline of profits of Industrial Enterprises above scale is mainly affected by the economic restructuring, besides the great changes in the domestic and foreign economic environment. With the deepening of supply-side structural reform and the closing stage of the disposal of zombie enterprises, if these factors are eliminated, the overall operation of Industrial Enterprises above the scale still shows a stable, stable and progressive pattern, showing the resilience of China's economy. The profit of scale enterprises changed from negative to positive, which highlighted the effectiveness of supply-side structural reform. From January to July this year, the total profits of state-owned holding enterprises in Enterprises above the scale reached 108.37 billion yuan, down 8.1% from the same period last year, which is the largest decline among all enterprises. The reason is that "capacity removal" especially the disposal of zombies enters the stage of closure, and state-owned holding enterprises are the focus of "capacity removal" and the disposal of zombies, so the impact is greater. This can also be confirmed by the decline in the asset-liability ratio of state-owned holding enterprises. Data show that by the end of July this year, the asset-liability ratio of state-owned holding enterprises was 58.3%, which was 1.1 percentage points lower than that of the previous year. The decline of asset-liability ratio is quite beneficial to the healthy development of state-owned holding enterprises in the future, and helps to further prevent risks.

From the operation of specific enterprises, the operation of equipment manufacturing enterprises and private enterprises has improved, which also shows from the side that the effect of economic restructuring is showing. Data show that in July, the profit of equipment manufacturing industry increased by 4.8% year-on-year, 2.2 percentage points higher than that of all industries above the scale. Except for the electric machinery and automotive industry, the profit growth rate of the metal products industry increased by 21.8% year on year, and decreased by 0.7% in June. Especially for private enterprises, profits in July increased 11.4% year-on-year, 9.7 percentage points faster than in June. The growth of private enterprises'profits not only supports the improvement of macroeconomic data, but also reflects the improvement of enterprises' and entrepreneurs'confidence. It is also a sign of the enhancement of economic development expectations in the future. Enhanced enterprise confidence and investment will play a key role in boosting employment and income growth of residents.

In addition, although the current consumer market does not appear a hot scene, the automobile market even shows a certain downturn, but it does not change the overall pattern of the consumer market to be better and upward, nor does it affect the role of consumption in stimulating economic growth. Data show that in July, the profit of consumer goods manufacturing industry increased by 10.0% year-on-year, 7.4 percentage points higher than that of all industries above the scale, and 6.1 percentage points faster than that in June. Among them, the profit of food manufacturing industry increased 21.5% year-on-year, decreased 4.9% in June, and the profit of agricultural and sideline food processing industry increased 25.4%, which was 18.6 percentage points faster than that in June. This indicates that residents'demand for consumer goods still maintains good consumption desire and confidence, which also promotes a good balance between the production and supply system of consumer goods, changes the pattern of consumer goods manufacturing to a large extent, and promotes the development of consumer goods manufacturing. Overall, from state-owned holding enterprises to private enterprises, from equipment manufacturing to consumer goods manufacturing, from production to consumption, from enterprises to residents, all maintain a good state of operation and stable psychology. This shows that although the uncertainty of the external economic environment still exists and the domestic economy is facing downward pressure to a certain extent, the domestic demand is still vigorous and needs to be further tapped. This is the unique resilience of China's economy to resist downward pressure.