On February 8^TH , China Federation of Industrial Economics, jointly organized, with China Industry News, the symposium on the analysis of the operation situation of industrial economy in Beijing. It pointed out that:

The contraction pressure of market demand has increased significantly

In 2022, the overall operation of Chinese economy is significantly lower than what’s expected at the beginning of the year. From international perspective, geopolitics, Russian-Ukrainian conflict, energy crisis, inflation, and other factors have contributed to the continuously high commodity prices, the rising costs of raw materials, and the conspicuously increasing contraction pressure of market demand. From domestic perspective, the industrial chain and supply chain in various sectors are shrinking simultaneously, relatively obvious in supply and demand aspects, with huge impact on small and medium-sized enterprises. Confronted with above situations, China has successively introduced measures to ensure steady growth, and stable employment and economy. As a result, the market is generally stable. Although there were local, phased, or short-term supply and demand defects, those measures have played a certain role in guaranteeing industrial growth, raw material supply and material sales, to ensure the normal operation of the industrial chain.

Nevertheless, the volatility in China's economic recovery process in 2022 has increased significantly, and it is difficult for various industries. First, the downstream demand of China's steel industry is less than expected, energy prices are high, steel prices are falling, and the economic benefits of the industry are declining; Second, the recovery of China's light industry economy has shown a slowdown trend, domestic and foreign demand are declining, and the added value, consumption and exports of some light industry industries have negative growth throughout the year; Third, China's electricity consumption presents the characteristics of "two highs and two lows", and the industry has great operating pressure; Fourth, China's machinery industry generally shows a trend of "two ups and two falls", and the main economic indicators have generally not met the expectations of the whole year; Fifth, China's non-ferrous metal industry is facing the trend of demand contraction, supply shock, and expected weakening; Sixth, the efficiency growth of China's petrochemical industry has fallen at a high level, and the internal division is obvious; Seventh, 2022 is the most difficult year for the operation of China's building materials industry, and large enterprises have serious losses; Eighth, China's logistics service industry has encountered many problems and difficulties in the industry.

In general, the problem of insufficient market demand in various industries is prominent. In 2022, China's steel demand declined, and the apparent consumption of crude steel was 960 million tons, down 3.4% year-on-year; sluggish downstream demand for oil and gas and chemicals; Real estate development investment, housing construction, and completed area continued to decline, and the pulling effect on the building materials industry was significantly weakened, and market demand was less than expected.

The economic efficiency of various industries continues to decline. In 2022, the high price of thermal coal in China will lead to an increase in the operating pressure of coal power enterprises, and the loss area will continue to be more than 50%; The efficiency of the steel industry has declined significantly, with the operating income of member enterprises of China Iron and Steel Association falling by 6.35% year-on-year, and the total profit falling by 72.27% year-on-year; The application revenue of coal enterprises above designated size increased by 19.5% year-on-year, but the growth rate of industry profits declined; The operating income of China's building materials industry above designated size fell by 4.2% year-on-year, and the total profit fell by 20.4% year-on-year.

All sectors remain cautiously optimistic

In 2023, whether from the perspective of the international situation or the domestic situation, there are many uncertain factors, greater pressure, and low global growth forecasts, and all industries in China maintain a cautious and optimistic attitude. At present, the United States is suppressing China in an all-round way, and the most affected is the industrial industry, especially the high-end manufacturing industry; The impact of the coronavirus pandemic and natural disasters is uncertain; After the liberalization of epidemic prevention and control, there is uncertainty about the extent, time and motivation of new momentum and new demand release; The entire social market, including entrepreneurs, is expected to recover for a long time, and there is a great deal of uncertainty. From the perspective of industry, China's industry has space and gaps, but "high-precision and cutting-edge" can not be achieved in a short time, and there needs to be a long time of innovation process.

However, with the implementation of various policies and measures to stabilize growth, China's economy will return to the normal growth track in 2023, the epidemic prevention and control will be liberalized, and rigid demand will be further released, bringing space for economic recovery.

Experts agree that China's industrial growth rate will be better in 2023 than in 2022. First, the economic recovery will support the demand for steel in the manufacturing industry, if the real estate improvement is less than expected, steel demand or a slight decline; Second, the resumption of work and production in China's light industry after the Spring Festival is generally normal, but it faces problems such as festive and structural recruitment difficulties, high costs, large inventory, weak demand, and reduced orders; Third, China's power supply and demand are balanced, and the supply and demand of electricity during peak hours in some regions are tight; Fourth, China's machinery industry has achieved a certain degree of growth, but the growth rate may not be so high, and the preliminary judgment is that the annual growth rate is about 5%; Fifth, as long as there is no large-scale "black swan" event in China's nonferrous metal industry, production will remain stable on the whole; Sixth, the president of China's petrochemical industry maintained a steady visit, the internal growth structure has changed, the ultra-high growth of upstream oil and gas has declined, and the downstream refined oil and chemical industry have improved slightly; Seventh, the pulling effect of China's industrial consumption on the building materials industry will rise steadily, and the adjustment of industrial structure will increase the growth momentum of the industry; Eighth, after China's epidemic prevention and control was liberalized, the recovery of transportation and logistics was more obvious, and the logistics boom was expected to be promising; Nineth, China's macroeconomy has returned to the normal track with the implementation of various measures to stabilize growth, which is conducive to the recovery of coal demand.

It is worth noting that the high global inflation in 2023 will continue the trend of high commodity prices, exerting downward pressure on China's economy. If the prices of major fuels such as coal, natural gas and other building materials and raw materials such as petroleum asphalt, soda ash, resin, and steel bars in China continue to rise sharply, building materials enterprises will continue to operate in the high cost range, and the pressure of production factors on the steady growth of the industry will increase. At the same time, the global LNG supply and demand market is prone to extreme situations, and there are greater risks in the resource financing of China's petrochemical upstream gas supply enterprises, and there is greater pressure on downstream user costs.

(Source: China Industry News)