Double Digit Growth For Seven Consecutive Months, And Industrial Profit Will Exceed 6 Trillion Yuan In 2020

According to the data released by the National Bureau of statistics on January 27, the total profits of Industrial Enterprises above Designated Size nationwide will reach 6451.61 billion yuan in 2020, an increase of 4.1% over the previous year. The profit growth is more than 60%, and the manufacturing industry plays an important role. In December 2020, the profits of Industrial Enterprises above designated size increased by 20.1% year-on-year, 4.6 percentage points faster than that in November. After the monthly growth rate changed from negative to positive in May, it maintained double-digit growth for seven consecutive months.

"In 2020, the production and operation of industrial enterprises will continue to recover steadily, and their profits will achieve rapid stabilization and sustained improvement." Zhu Hong, a senior statistician at the industry department of the National Bureau of statistics, said that this year's profits showed a trend of "turning from negative to positive, accelerating quarter by quarter". Affected by the severe impact of the epidemic, the profit in the first quarter decreased by 36.7% year on year. With the implementation of the tasks of "six stabilities" and "six guarantees", the level of enterprises' resumption of work and production has been steadily improved, with the growth rate turning from negative to positive, and accelerating to 20.8% in the fourth quarter.

"Profits of industrial enterprises have continued to recover, and the growth rate of accumulated profits has continued to grow since October when it became normal." Wang Han, chief economist of Societe Generale Securities (8.260, - 0.14, - 1.67%), said that the rapid growth of profits was mainly due to the improvement of enterprise profitability and the cost reduction caused by tax reduction and fee reduction in the relief policy.

In terms of industries, in 2020, of the 41 major industries, the profits of 26 industries increased over the previous year, of which 15 industries achieved double-digit profit growth, with 63.4% of the total industries. In terms of categories, in 2020, the profits of the manufacturing industry will increase by 7.6% over the previous year, which will drive the profits of Industrial Enterprises above Designated Size to increase by 6.4%.

The profits of major industrial sectors were all positive growth. Zhu Hong pointed out that due to the switch of environmental protection standards, the promotion of infrastructure projects and the promotion of housing economy, the profitability of equipment manufacturing industry recovered first. In 2020, the profit of the equipment manufacturing industry will increase by 10.8% over the previous year, which has a significant driving effect on the overall manufacturing industry.

The profits of high-tech manufacturing industry maintained a rapid growth. In 2020, the profit of high-tech manufacturing industry will increase by 16.4% over the previous year, which is the industry sector with the fastest growth in profit, which strongly promotes the continuous optimization of industrial profit structure.

With the gradual opening of the upstream and downstream industrial chain, under the combined effect of domestic market demand recovery and international commodity price recovery and other factors, the profit of raw material manufacturing industry rapidly recovered and improved quarter by quarter after a sharp decline at the beginning of the year.

However, Zhu Hong also pointed out that industrial enterprises are still facing problems such as the rapid growth of accounts receivable, the increase of inventory and the pressure of cash flow. In 2021, it is necessary to speed up the construction of a new development pattern, strive to smooth the economic cycle, maintain the continuity, stability and sustainability of macro policies, grasp the timing and effectiveness of policies, continuously consolidate the situation of industrial economic stability and recovery, and achieve a good start to the development of the "14th five year plan".