Slowdown shows shifting economic aspect
Print Edition
CHINA’S economy is slowing, but looking deeper, the performance results of companies reveal a shifting economic landscape triggered by the country’s accelerated restructuring efforts.
As of Thursday, 105 listed companies have disclosed their preliminary annual results of 2015. Two thirds of them reported net profit growth, while 18 companies saw profits more than double.
But the performances were split. Traditional sectors like nonferrous metals saw business falter, while emerging industries such as electronics and securities reported robust growth.
In particular, 11 securities companies enjoyed over 100 percent net profit growth last year, showing abundant transactions in the capital market of the world’s second-largest economy.
Meanwhile, successful restructuring of assets helped boost profits of some electronic companies, according to a report by China Securities Journal yesterday.
Iron and steel producers, however, suffered major losses or a huge slump in profits.
Baosteel, China’s leading listed steel company, posted an 83 percent slump in annual net profit.
The profit results showed the growth engine has steadily moved from traditional industries to emerging ones against the backdrop of China’s restructuring push.
The profits of major industrial firms in 2015 fell year on year for the first time in over a decade, the National Bureau of Statistics data showed on Wednesday.
Although the overall situation is grim, the high-tech industry, equipment manufacturers and consumer goods producers posted profit gains of 8.9 percent, 4 percent and 7 percent, respectively.
China’s policy-makers are striving to steer the economy away from an export-driven and credit-fueled growth model to one based on stronger consumer spending, innovation and services.
Pro-consumption policies helped push consumption to contribute 66.4 percent to the gross domestic product in 2015, up 15.4 percentage points from 2014.
The service sector contributed 50.5 percent to the economy in 2015, up from 48.1 percent in 2014, official data showed. It is the first time the service sector has exceeded 50 percent, according to the statistics bureau.
“While expanding aggregate demand in an appropriate way, China will vigorously pursue structural reform, particularly supply-side structural reforms,” Premier Li Keqiang said on Thursday in a phone call with International Monetary Fund Managing Director Christine Lagarde.
The reform is expected to advance economic restructuring by reducing non-effective and low-end supply, and boost productivity by expanding medium-to-high-end supply.
After decades of economic reform, the growth model and consumption demand in China have changed fundamentally, from universal short supply to oversupply in some sectors, and from an emphasis of quantity to a preference for quality.
The country’s economic growth slowed to 6.9 percent in 2015, the lowest level in 25 years.
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