Something unheralded is happening in Chinese economy. China’s large manufacturers are continuing to lose money – a lot of it. After almost two decades of consistently upward growth curves, buyers have postponed queueing for access to the Factory of the World. Consequently the first five months of 2009 saw the combined profits of China’s major industrial companies drop 22.9 per cent year on year.
At the same time, however, signs are that the Chinese economy is beginning to ride a stronger wave. The 22.9 per cent January-May drop in industrial profits compares favourably with the 37.3 per cent drop year on year in the first two months of 2009. Operating costs in the first five months of 2009 also dropped by 0.9 per cent year on year. Meanwhile, the World Bank has revised its 2009 China GDP growth figure, to 7.2 per cent from 6.5 per cent, citing its fiscal policies that have enabled the Chinese economy to “grow respectably.”
The coming months will be pivotal for the long-term health of China’s industrial sector. Some analysts predict a wave of consolidation, including several mergers and acquisitions. Others argue that China’s economy will largely pick up where it left off in mid-2008, and grow faster than expected in the second half of 2009, and that industrial manufacturing will benefit from both expanded government expenditure in major infrastructure projects and the continued strength of Chinese retails sales.
This entry was posted
on Monday, June 29th, 2009 at 2:50 am and is filed under News commentary.
You can follow any responses to this entry through the RSS 2.0 feed.
Both comments and pings are currently closed.
Declining Industrial Profits May Herald A Brighter Future
Something unheralded is happening in Chinese economy. China’s large manufacturers are continuing to lose money – a lot of it. After almost two decades of consistently upward growth curves, buyers have postponed queueing for access to the Factory of the World. Consequently the first five months of 2009 saw the combined profits of China’s major industrial companies drop 22.9 per cent year on year.
At the same time, however, signs are that the Chinese economy is beginning to ride a stronger wave. The 22.9 per cent January-May drop in industrial profits compares favourably with the 37.3 per cent drop year on year in the first two months of 2009. Operating costs in the first five months of 2009 also dropped by 0.9 per cent year on year. Meanwhile, the World Bank has revised its 2009 China GDP growth figure, to 7.2 per cent from 6.5 per cent, citing its fiscal policies that have enabled the Chinese economy to “grow respectably.”
The coming months will be pivotal for the long-term health of China’s industrial sector. Some analysts predict a wave of consolidation, including several mergers and acquisitions. Others argue that China’s economy will largely pick up where it left off in mid-2008, and grow faster than expected in the second half of 2009, and that industrial manufacturing will benefit from both expanded government expenditure in major infrastructure projects and the continued strength of Chinese retails sales.
This entry was posted on Monday, June 29th, 2009 at 2:50 am and is filed under News commentary. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.