Supply-side reform key to restructuring economy
- By Chen Suming
0 Comment(s)
Print
E-mail China.org.cn, April 5, 2016
|
|
|
Setting sail [By Zhai Haijun / China.org.cn] |
An enterprise's sustainability and ability in replenishing its stock are important references in analyzing whether the economy can be stabilized or even resume robust growth.
Generally speaking, the enterprises in China have already started trying to rebuild their stocks, which can be seen from the following three angles.
Total electricity consumption increased by 2 percent year-on-year in the first two months of this year, which ended the cycle of continuous negative growth since the second half of 2015. The increasing ratio is 4.2 percentage points higher than it was in December. These figures show that industrial production is better than it was in December, although it has remained weak.
The export delivery value in January and February declined by 4.8 percent year-on-year (three percentage points lower than in November and December). The industrial added value increased by 5.4 percent year-on-year at the same time. Its increasing ratio is only 0.5 percentage points lower than it was in December. It means that industrial manufacturing has performed better than export, and that stock is accumulating.
By March 16, the coal stock in Qinhuangdao Port, China's main coal trading port in Hebei Province, increased from its record low of 3 million tons to 3.67 million tons, though the stock has remained at a low level since 2008.
Rebuilding stock is a question for enterprises. The dilemma for enterprises is that their immediate needs conflict with their restructuring goals in the long run. Since 2011, every round of replenishing stock has resulted in a lessened market demand and price. Gradually, the enterprises' willingness to rebuild their stock has become weaker and weaker, making them prudent and hesitant. The sharp rebound of staple commodities and industrial products will cause the rise of enterprises' procurement costs, and further suppress the enterprises' intention to replenish their stocks.
At this moment, enterprises are mostly expecting more noticeable signals on the demand end. However, I think the Chinese economy has shown the possibility of starting a round of small-scale stock replenishing.
The staple commodity stock is low, and the current destocking process is comparatively thorough. Take the coal industrial chain as an example, the coal stock in Qinhuangdao Port attained a record high of 8.06 million tons in March 2015. Since then, it has been decreasing slowly, falling to 5.85 million tons by the end of November. As the declining ratio sped up after December, the stock fell to 3.3 million tons by the end of last year - a drop of 2.55 million tons in December alone. By that time, the coal stock in Qinhuangdao was lower than it was during the financial crisis in 2008.
Go to Forum >>0 Comment(s)