Profits of industrial companies down
As usual, at the beginning of the following month, economical data about the past period and summaries began to be published since the beginning of the year.
Recent data indicate that the Chinese economy slowed down, although the first 4th of this year gave hope that China would rapidly turn straight.
A worrying signal is that business profits have been falling for 9 months. Between January and the end of April, they decreased by 20.6% y/y.
Looking at individual sectors, it should be stressed that the sectors of production and construction are peculiarly affected by the decline.
However, the most dwindling profits were the mining industry. Although China is the world's largest coal producer, the mining manufacture presently faces a price depression in the face of advanced supply.
The expanding home production and its large imports have caused the highest stock of this natural material in history. No wonder prices are falling.
Such a large drop in corporate profits between January and April is simply a origin for concern. Without the intervention of the central government and the stimulation of the economy, it will not be possible.
Main financial indicators of industrial enterprises from January to April 2023
Source:
The investigation includes industrial enterprises with yearly income of more than RMB 20 million (about PLN 11.83 million).
PMI in May below 50 points
Other data showing where the weak links of the economy are are information on activity in the economy (Purchasing Managers Index PMI).
In May, the PMI index for China manufacture was 48,8 points y/y. Second period in a row below the 50 point limit.
In the last 12 months (May 2022 to May 2023), only in June and September last year and January, February and March this year, the PMI's main index "exited" over the 50-point limit.
The only PMI indicator to hold tight this year is PMI for the non-productive sector (including services and construction).
The 5th period in a row its reading exceeds 50 points. In May, the reading was 54.5 points.
Services are holding tight, but manufacture is inactive touching turbulence.
May PMI data keep a discrepancy between the situation in production and services. Where does that difference come from? Among others: decline in investment in fixed assets, insufficient production demand, mediocre consumption, expanding hazard of falling external demand. In addition, the prices of the main natural materials and materials fall.
From the position of the size of companies, the situation where tiny and medium-sized companies face deconituncies, large companies, is inactive comparatively well.
PMI of large, average and tiny enterprises in May amounted to 50.0%, 47.6% and 47.9% respectively. This means a fall in PMI for tiny and medium-sized companies in the month-to-month ratio. They are almost entirely private companies, which supply over 80% of employment in cities. Another problem requiring attention and intervention by the authorities.
Source:
Data of the State Statistical Office (国家统计局)
Rail investments are growing
During the first 4 months of this year, investments on the Chinese railway amounted to RMB 166.4 billion (about PLN 100 billion). That's 6.3% more than last year. Investment ensures that China's global leadership is maintained in the improvement of high-speed rail networks.
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BRICS plus 19?
Preparations are underway for the September BRICS summit (Brazil, Russia, India, China and South Africa).
In the first days of June, BRICS abroad Ministers met to discuss the agenda of the summit. 1 crucial point of discussion was the question of extending the BRICS Group. Since the beginning of 2022, 19 countries have submitted their accession to the organization, including Saudi Arabia, Iran, United arabian Emirates, Bahrain, Algeria, Egypt, Indonesia, Argentina.
There is no authoritative information as to whether any requests have already been examined and what is the decision of the founding members. But it is certain that the 5 will expand. A lot. Which definitely isn't everybody's gonna like.
Originally, the organization was named BRIC in 2006. This is due to the fact that it was created at the initiative of Brazil, Russia, India and China. In 2011, the group expanded to include South Africa (BRICS). The BRICS countries account for over 43% of the full population, 20% of global GDP and 20% of global abroad trade. The share of BRICS countries in planet production at marketplace prices increased to 25.5%. The group has its own bank – fresh improvement Bank (NDB), which presently funds 80 investment projects in associate States for the sum of USD 30 billion (about PLN 125,780 million).
The 15th BRICS summit will take place in Johannesburg (South Africa) from 22 to 24 August.
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Author: 梁安基 Andrzej Z. Liang, 上海 Shanghai, 中国 China
Email: [email protected]
Editorial: Leszek B.
Email: [email protected]
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