Industrial Enterprises Are Forced To Turn Their Attention To Other Investment Channels.

According to the latest statistics of China's National Bureau of statistics, in the first quarter of this year, industrial enterprises above Designated Size realized profits of 10449 billion yuan, down 1.3% from the same period last year. The fall in industrial profits in the first quarter of this year warned that although the Chinese government took the initiative to control the economic slowdown, its development of the real economy should not be weakened.

The real economy is regarded as the foundation of China's national economy. China has been highly vigilant against the consequences of industrial hollowing out like western countries. This year's government work report also stressed the need to support the development of the real economy.

Such factors as extrusion of purchase and sale price, sluggish sales revenue growth and rising labor cost are pushing up the production cost and operating profit of China's manufacturing industry, and forcing more and more enterprises to turn their attention to other investment channels.

Analysts say that the increase in the cost of sales, management and financial expenses indicates that more manufacturing enterprises are expanding their main businesses.

From 1 to March this year, the profit of industrial enterprises increased by only 19 billion 800 million yuan due to the increase in factory prices, and the profit increased by about 121 billion 400 million yuan. The two industries offset the profits of industrial enterprises by a net profit of 101 billion 600 million yuan, and the profits of Industrial Enterprises above Designated Size dropped by 9.3 percentage points.

Senior economist of China Development Office, Asia Development Bank Zhuang Jian It is pointed out that the depressed external demand caused by the world economic downturn and the domestic economic slowdown under active regulation are all important factors leading to the decline of China's manufacturing profits.

In the 1-3 month, the main business income of Industrial Enterprises above designated size increased by 14.1% compared to the same period last year, although the increase was 0.7 percentage points higher than that in 1-2 months, but it still dropped 13.1 percentage points over the previous year.

The current Chinese manufacturing industry's profit troubles are also reflected in the rapid decline in the main business income of foreign-funded enterprises in China. In the first quarter, the main business income of foreign-funded enterprises was only 50191 billion yuan, up by 7.2% over the same period last year.

In the first quarter, the cost of the main business revenue of Industrial Enterprises above designated size was 84.93 yuan, an increase of 0.67 yuan compared with the same period last year.

Song Yongliang, director of the office of Jiangsu Wuxi De Lin Shipping Equipment Co., Ltd. told Xinhua that the employment cost of manufacturing enterprises in the region has increased by at least 15% this year. Many enterprises prefer to purchase equipment at high prices instead of employing new labor force.

The head of Jiangsu Jinchen Textile Co., Ltd. said that sales fell by about 30% in the first quarter of this year, due to sluggish sales and rising costs.

In the 1-3 month, the growth rate of sales expenses, administrative expenses and financial expenses of Industrial Enterprises above designated size increased by 14.9%, 16.7% and 35.1% respectively, which were higher than those of main business revenue.

Stan, assistant director of the Institute of industrial economics of the Chinese Academy of Social Sciences, said that in order to ensure profits and maintain survival, more and more enterprises lack the power to invest in manufacturing and begin to turn to other industries.

Jiangsu Changshu textile machinery plant The company said that in 2011, the sales volume of the company increased to 210 million yuan, but it lost nearly 1 million 500 thousand yuan. The company's profit mainly came from the financial auxiliary industry, and the profit margins of the manufacturing industry were shrinking.

Statistics also showed that chemical raw materials and chemical products manufacturing profits fell by 23.1%, ferrous metal smelting and calendering processing industry decreased by 83.5%, computer, telecommunications and other electronic equipment manufacturing industry decreased by 12.2%; oil processing, coking and nuclear fuel processing industry from the same period last year profit to loss, is to pull down the first quarter of state-owned and state holding enterprises profit is an important reason.

"The government's active regulation of economic slowdown has a relatively large impact on large and medium-sized state-owned enterprises." Zhuang Jian said.

The decline in industrial profits in the first quarter warned that China's financial sector's credit support for the real economy needs to be strengthened, and speed up the pace of economic restructuring, industrial restructuring and technological upgrading, and seek new market demand and profit margins for the manufacturing sector.

However, compared with the previous two months, the profit situation of Industrial Enterprises above Designated Size in China has improved in March. "I hope this is an important sign of China's economic stabilization and recovery." Zhuang Jian said.