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| China Industrial growth |
The growth rate of the industrial added value of Chinese enterprises above the designated size (enterprises with annual sales of more than 20 million yuan) in the first quarter of 2011 was 5.2 percentage points lower than that of the same period of last year. The rate in April was 1.4 percentage points lower than that of March. The Chinese economy has entered a period of steady growth after recovering quickly from the global financial crisis with the help of a stimulus plan. A slowdown in industrial growth is an inevitable result of the ongoing industrial restructuring. Furthermore, there are also some other reasons behind the slowdown.
First, enterprises above the designated size witnessed rapid and considerable growth in industrial added value last year, which was a high base of comparison.
Second, the slow global economic recovery is facing increasing uncertainty. Japan's earthquake, tsunami and nuclear crisis have produced direct and indirect effects on the supply of key components in the automotive, electronics and other industries, and have affected China's industrial output to a certain degree.
Third, some industries are faced with the increasingly serious problem of overcapacity. Due to the central government's strict real estate control measures, domestic consumption dropped for items such as household appliances, furniture and building materials, which are closely related to the property industry, and some preferential policies and subsidy plans for auto purchases were terminated. As a result, the domestic demand for certain industrial products declined, and the steel, building materials, automobile, and some other industries are facing growing pressure from overcapacity, which affected the country's industrial growth to some extent.
Fourth, rising costs of factors of production and the global surge in the prices of energy and raw materials have placed domestic industrial enterprises under considerable pressure and caused certain industries to grow slower. Due to the imported inflation pressure and high inflation expectations, Chinese currency authorities have tightened up the monetary policy and imposed strict controls on bank loans. As a result, many enterprises, especially small and medium-sized enterprises, are suffering from capital shortages. In addition, the imbalance between energy supply and demand has become more serious because of the rapid development of high-energy-consumption industries.
Increasing pressure on industrial restructuring
2011 is the first year of the 12th Five-Year Plan. The industrial economy is facing the dual tasks of maintaining steady and rapid economic growth and accelerating structural adjustment. Judging from the current industrial economic situation, the overall industrial production growth is stable, while the demand growth is slowing down, causing the accelerated growth of industrial product inventory and overcapacity as well as increasing pressure. Therefore, the government must intensify structural adjustment to promote industrial restructuring and upgrading.
Promoting industrial restructuring requires related departments to accelerate the elimination of backwards production capacity, strengthen the technical transformation of enterprises, accelerate the development of strategic emerging industries, strengthen the energy conservation work and actively expand the international market.
China to maintain stable and rapid industrial growth in 2011
Rapid industrial growth is very important for ensuring and increasing supply, expanding employment and maintaining stable and rapid economic development. The steady and rapid industrial economic development in China enjoys many favorable conditions.
Investments will maintain rapid growth to actively and steadily promote urbanization, expand the scale of affordable housing construction and encourage the expansion of private investments. In regard to consumption, the Chinese government implemented a strategy of expanding domestic demand and has made expanding consumer demand a strategic priority to increase the income distribution system reform.
The rapid income growth will create conditions for expanding consumer demand. In regard to the international market, the global economy continues to recover along with the gradual weakening of the impact from international emergencies, which will drive rapid growth in exports. Meanwhile, it is expected that the effects of price changes will gradually weaken in the second half of 2011, which will also help ease inflationary pressure. All these factors are conducive to improving the environment for industrial development and promoting the stable and rapid industrial economic development, thus to create more favorable conditions for the stable and rapid economic development throughout the year.
The article is written by Wang Yiming, deputy director of the Academy of Macroeconomic Research under the National Development and Reform Commission, and is translated by People's Daily Online.
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