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NEWS

A Brief Discussion on the Phenomenon of "State Retreating from the People and Entering the Country" in the Structural Reform of

Classification:
Industry News
Author:
Source:
2018/03/20

Since last year, the prices of various raw materials such as hardware, wood, metal, iron ore, coal, and steel have risen sharply, and the operating pressures faced by small and medium-sized manufacturing companies have become greater. Recently, another wave of price rises hit again. First, some Taiwanese machine tool makers received a notice from Japan’s Fanuc that the price of the central controller will increase by 5% to 10%, followed by Kenna Asia and Nanchang. Cemented carbide, Chunbaosenlao and other tool alloy companies have also issued price notifications in succession. At the same time, according to data released last weekend, the profit growth of industrial enterprises in July dropped from 19.1% to 16.5%.

Under such circumstances, Xiao Bian found that although prices have increased and corporate profits have slowed down, these upstream raw material companies have continued to make profits through price pass-through. The mid-to-downstream machine tool manufacturers cannot raise their prices due to the apparent increase in demand for manufacturing, and profit margins have been significantly squeezed.

But the miraculous thing is that the same situation has not happened to the state-owned enterprises. The data shows that in July, the growth rate of state-owned enterprises' profits increased from 13.5% to 34.2%, and the profits earned were full.

Due to overcapacity in the manufacturing industry, the government initiated comprehensive structural reforms on the supply side from last year, followed by the Ministry of Environmental Protection’s launching of what has been dubbed “the toughest environmental supervision in history” by many people. Small and medium-sized private enterprises were killed. The production capacity went up and the prices went up further. However, these basically did not matter to small and medium-sized enterprises. In the upstream enterprises, a large number of small and medium-sized private enterprises were shut down. The remaining large and medium-sized enterprises, mainly state-owned enterprises, enjoyed the policy dividends and still enjoyed good drinking. hot. At this point, the new round of manufacturing industry has begun to develop.

It is true that Xiaobian also understands the government's painstaking efforts to eliminate excess capacity and backward production capacity so that the manufacturing industry can avoid ineffective competition and further promote industrial agglomeration and replacement, thus forming a good market. However, whether the supply clearing must be enforced through administrative means to reduce the time, Xiaobian thinks that it has yet to be discussed.

In fact, in the past three or four years, China's production price index has been showing a negative growth trend. Excess and backward production capacity has slowly been eliminated under the influence of the market, and it is unlikely to be revived. Under such circumstances, why can't we wait to avoid excessive administrative intervention and, under the guidance of major guidelines, give market adjustments to allow it to slow down excessively? Although such a process is long and bitter, the economic growth rate continues to decline, and banks The bad debt rate will rise further, but as long as this hard time has passed, the future will surely be a sunny scene. Moreover, after this experience, both state-owned enterprises and private enterprises will be even more powerful, and efficiency and profit will inevitably greatly increase.

Of course, due to the special relationship, state-owned enterprises will not ignore the government's reforms. Generally, they will be given a certain amount of subsidies and policy dividends at the initial stage, that is, the so-called “helping and getting a ride” and hoping for the pain of reforms. In the meantime, the transition to reform will be smoothly achieved. However, the outcome we see is often that the state-owned enterprises after the mobilization of horses are often unable to cut off milk, and finally become "sucking insects," and the market-oriented operations the government is looking for are out of reach.

Therefore, Xiaobian believes that the phenomenon of "advancement of the country by the people" in the supply-side reform of the manufacturing industry should attract attention and be vigilant. It should not objectively provide policy dividends for the reform of state-owned enterprises at the expense of the private enterprises. This is a healthy and good manufacturing industry environment. The formation is not good.

In today's market economy environment, the market regulates everything. Although occasional mistakes require “visible hands” to assist corrections, it is still the power of the market that really plays a decisive role. In terms of top-level design, the government's implementation of supply-side structural reforms is timely and crucial. However, at the actual operational level, should it rely more on market forces?