The decline in corporate profits triggered the loosening of monetary policy

For more than two years, the profits of Chinese companies have not experienced such a downward trend in the first two months of this year, and the sluggish demand and high cost have begun to warn.

According to data released by the National Bureau of Statistics yesterday, from January to February, the profits of industrial enterprises above designated size reached 660 billion yuan, a year-on-year decrease of 5.2%.

Among them, in addition to collective enterprises and private enterprises, the profits of state-owned and state-owned holdings, foreign-funded and joint-stock enterprises all fell across the board. State-owned and state-owned holding companies saw the largest decline in profits, down 19.7% year-on-year. The private sector, which has been growing at a high profit rate, achieved a growth rate of 24.4%.

The decline in profits in some industries has been significant. According to data released by the National Bureau of Statistics yesterday, among the 41 major industrial sectors, 14 industries saw a decline in profits, and one industry turned from a profit to a loss in the same period. The decline in profits was mainly in the ferrous metal smelting and rolling processing industry, chemical raw materials and chemical manufacturing, as well as computer communications and other electronic equipment manufacturing industries; the industries that turned profitable losses during the same period were petroleum processing, coking and nuclear fuel processing industries.

The steel industry has now fallen into losses throughout the industry. Affected by the double dips of the BDI index diving and the sharp increase in international crude oil prices, shipping companies have been difficult since last year. Business operations are very difficult, and some enterprises even went bankrupt. Due to the sluggish price of electrolytic aluminum and rising costs, listed company China Aluminum achieved a net profit attributable to shareholders of listed companies of 238 million yuan last year, a significant drop from the 777 million yuan in 2010.

Since the second half of last year, the situation at home and abroad has been relatively severe. The demand of Chinese enterprises is not very strong, and the cost is still high. As the business environment is deteriorating, the profit growth rate is negative. Since industrial investment has not started in a timely manner in the first quarter, the government's real estate market policy is still tightly controlled, and it is difficult to expect to improve corporate demand through investment. In particular, state-owned enterprises are more affected by the decline in investment.

Nomura Securities believes that weak industrial profit data indicates that China needs to take interest rate cuts in the next few months and implement investment-led efforts, and pressure on the Chinese government to further relax macroeconomic policies and boost domestic demand is accumulating.

In the interview, some local private enterprise leaders told reporters that although the central bank has lowered the deposit reserve ratio, it is very difficult to get loans now, and it is often necessary to obtain sufficient funds through “walking relationships”.

Nomura Securities believes that the Chinese central bank's reduction of the deposit reserve ratio will only help increase the loan supply, and will not help solve the problem of weak demand. The central bank needs to cut interest rates in the next few months.

Lu Zhengwei, chief economist of Industrial Bank, said that the CPI may rebound in March, which will keep monetary policy in a “neutral state”, but it will not be more relaxed; but in order to meet the normal liquidity needs of the market, It is expected that the statutory deposit reserve ratio will still be lowered in April, but the downward adjustment is not equal to easing. The interest rate cut is still hopeless. In the future, it can be expected to introduce a policy of allowing the loan interest rate to relax on the basis of the current 10% discount.

The market generally expects that this year's GDP growth rate will bottom out in the second quarter, and its bottom-to-quarter growth rate is in the first quarter. The downturn in the economic environment will continue for several months. In the face of policies that are difficult to relax quickly and the internal and external economic environment that continues to be sluggish, the SASAC, which is in charge of central enterprises, has begun to require enterprises to reduce costs and increase efficiency by improving management. Due to the limited loans, some central enterprises have also increased their efforts to issue bonds this year.

Zhu Boshan, general manager of Shanghai Tianqiang Management Consulting Co., Ltd. told reporters that for private enterprises, the shrinking front is a more rational choice now, but also in management must strive for refinement.

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