MIL-OSI Translation: Interpretation: The profits of industrial enterprises grew steadily and rapidly in the first half of the year

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MIL OSI Translation. Region: Peoples Republic of China-China Statistical Information Network-Chinese-

In the first half of the year, industrial profits grew steadily and rapidly

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—— Zhu Hong, a senior statistician from the Department of Industry of the National Bureau of Statistics, interprets the profit data of industrial enterprises

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  In the first half of 2021, as the national economy stabilizes and strengthens, the demand for industrial production recovers steadily, business conditions continue to improve, and corporate profits grow steadily and rapidly.

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   1. The profits of industrial enterprises have grown steadily and rapidly

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  In the first half of the year, the profits of industrial enterprises above designated size across the country increased by 66.9% year-on-year and 45.5% year-on-year; the two-year average growth rate was 20.6% (based on the same period in 2019 and calculated using the geometric average method), maintaining rapid growth. Among them, the profit of industrial enterprises above designated size in the second quarter increased by 36.0% year-on-year and 42.5% year-on-year, with an average increase of 19.4% over the two years.

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   Profits in various industries have generally grown rapidly, and 70% of the industry profits have exceeded the level before the epidemic. In the first half of the year, among 41 major industrial sectors, 40 industries saw profit growth (or turned losses into profits) year-on-year, and one industry remained flat year-on-year. Among them, 36 industries achieved double-digit profit growth and above, accounting for 87.8%; 7 industries had a growth rate of more than 100%. Compared with the same period in 2019, 29 industries achieved profit growth, accounting for 70.7%.

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   The profits of upstream mining and raw material manufacturing companies have increased significantly. In the first half of the year, the profits of the mining industry and the raw material manufacturing industry increased by 1.33 times and 1.83 times respectively year-on-year, and their contribution to the growth of industrial profits above designated size was 58.9%. The two-year average profit growth rate was 16.5% and 35.8% respectively. Under the combined effects of economic improvement, expanding demand, rising prices, and a low base in the same period last year, the profits of the chemical, steel, and coal industries increased by 1.77 times, 2.34 times, and 1.14 times, respectively, and the petroleum processing industry suffered losses from the same period last year. Turning to profit for the current period, the above four industries collectively contributed to a year-on-year increase of 29.1 percentage points in the profits of industrial enterprises above designated size.

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   The profit of the high-tech and equipment manufacturing industry maintained rapid growth. In the first half of the year, the profit of high-tech manufacturing industry increased by 62.0% year-on-year; the two-year average growth rate was 36.2%, which was 15.6% faster than the average level of industrial enterprises above designated size, and drove the average growth of industrial profits above designated size by 5.6 percentage points in two years. The profit of the equipment manufacturing industry increased by 39.5% year-on-year, an average increase of 18.3% over the two years. The profits of high-tech and equipment manufacturing industries accounted for 18.3% and 30.8% of industries above designated size, respectively, up 1.5 and 0.7 percentage points from the first quarter. Benefiting from favorable factors such as improved market demand, increased corporate orders, strong demand for liquid crystal panel integrated circuits and containers, the profits of the electronics, automotive, electrical machinery, general equipment, and metal products industries increased by 34% -53% year-on-year, which was driven by the total of the above five industries. The profits of industrial enterprises above designated size increased by 12.7 percentage points year-on-year.

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   The recovery of profits in the consumer goods manufacturing industry has accelerated. In the first half of the year, the profit of the consumer goods manufacturing industry increased by 38.6% year-on-year; the two-year average growth rate was 17.0%, 1.6 percentage points faster than the first quarter, and the recovery trend was further consolidated. Among them, under the influence of factors such as the expansion of anti-epidemic assets such as the new crown vaccine and testing reagents and the increase in production, the profit of the pharmaceutical manufacturing industry increased by 88.8% year-on-year; the two-year average growth rate was 38.8%, an acceleration of 12.7 percentage points from the first quarter. The profit of the chemical fiber and food manufacturing industries increased by 68.3% and 7.2% respectively in two years, an increase of 6.0 and 2.1 percentage points respectively over the first quarter. The two-year average decline in profits of the textile industry narrowed by 5.6 percentage points from the first quarter.

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  2. Continuous improvement of business conditions

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   Revenue growth is faster than costs, and corporate profitability continues to improve. In the first half of the year, the operating income of industrial enterprises above designated size increased by 27.9% year-on-year, and the growth rate was 1.5 and 9.2 percentage points faster than the combined operating costs and expenses respectively. The unit cost and expenses both decreased year-on-year, and the cost per hundred yuan of operating income decreased by 0.98 yuan year-on-year. Among them, the mining industry and the raw material manufacturing industry decreased by 6.79 yuan and 2.64 yuan respectively; the cost per hundred yuan of operating income decreased by 0.65 yuan year-on-year. The operating income profit rate of industrial enterprises above designated size was 7.11%, a year-on-year increase of 1.66 percentage points and an increase of 0.47 percentage points from the first quarter.

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  The number of loss-making companies has decreased, and the amount of loss has decreased. At the end of June, the loss of industrial enterprises above designated size was 22.5%, a year-on-year decrease of 2.4 percentage points, and a decrease of 4.6 percentage points from the end of March; in the first half of the year, the loss of loss-making enterprises decreased by 23.5% year-on-year. The loss of enterprises has improved significantly compared with the same period last year.

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   The growth rate of accounts receivable continued to fall, and the inventory turnover of finished products accelerated. At the end of June, the accounts receivable of industrial enterprises above designated size increased by 13.1% year-on-year, a decrease of 1.0 percentage point from the end of May, and it fell for three consecutive months. The average payback period for accounts receivable was 51.4 days, a year-on-year decrease of 5.9 days and a decrease of 2.4 days from the end of March. The finished product inventory turnover days were 17.4 days, a decrease of 2.5 days from the same period last year and a decrease of 0.9 days from the end of March.

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   The balance sheet has improved, and the company’s development has become more stable. At the end of June, the assets of industrial enterprises above designated size increased by 9.3% year-on-year, and owners’ equity increased by 10.3%, both achieving rapid growth. The asset-liability ratio of industrial enterprises above designated size was 56.5%, a year-on-year decrease of 0.4%. Among them, the asset-liability ratio of state-owned holding enterprises was 57.0%, a decrease of 0.5% year-on-year.

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   Overall, the profits of industrial enterprises recovered steadily in the first half of the year, and their operating conditions continued to improve. However, it should also be noted that the imbalance in the recovery of corporate benefits still exists, the recovery of profits of private and small and micro enterprises has been relatively slow, the continued high commodity prices have squeezed corporate profitability, and the supply chain of the industrial chain still has shortcomings. In the next step, we must thoroughly implement the decisions and deployments of the Party Central Committee and the State Council, maintain the continuity, stability, and sustainability of macroeconomic policies, continue to deepen supply-side structural reforms, vigorously support the development of the real economy, and further ensure supply and price stabilization to help enterprises Relieve difficulties and promote the sustainable and healthy development of the industrial economy.

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EDITOR’S NOTE: This article is a translation. Apologies should the grammar and/or sentence structure not be perfect.

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