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Business / Economy

CASS report sees signs of new growth momentum

By Wang Yiqing (China Daily) Updated: 2016-04-06 10:20

China's industrial growth has most probably broken free from the danger of a sharp downturn in 2016, according to a group of economists with the Chinese Academy of Social Sciences.

A newly published research paper by the CASS Institute of Industrial Economics states that although the growth of Chinese industry is at its lowest point since 1992, new growth momentum is gaining power. "The economy is still in the middle of changing gear," the paper says, forecasting that for the whole year, large industrial enterprises will maintain an average growth rate of between 5 and 6 percent in year-on-year terms.

That won't be significantly lower than 2015, when the overall industrial growth was 6.1 percent.

That also means Chinese industry will suffer less pain in 2016 than last year, and will achieve overall stability, the CASS economists said.

Zhang Yaxiong, director of forecasting with the State Information Center, agreed with the conclusion of the CASS paper, saying that even though it's still too early to say China's industrial growth has bottomed out, the nation has already made a few significant breakthroughs, which is expected to be conducive to this year's industrial growth.

The CASS researchers said industry will first of all benefit from China's continuous reform efforts, but it will also be helped by a number of government programs to boost the country's high-end manufacturing and trade, such as the "Made-in-China 2025" strategy, and it will also be spurred by the increasing international competition in the development of artificial intelligence, robots and 3-D printing.

The report states that green and environmentally-friendly industries, most noticeably the manufacturing of electric cars, are likely to have a much higher profile in China this year, as quality manufacturing and environmental protection are two important aspects of China's 13th Five-Year Plan (2016-20).

China's current industrial slowdown is something that "the so-called four Asian tigers all went through when they approached the later stage of industrialization", said Huang Qunhui, the CASS institute director and leader of the research project.

In general, the report says industries supplying materials face the greatest challenges because of falling prices and shrinking demand.

Equipment manufacturing will see only moderate growth, especially since the automobile industry has suffered a marked decline in value-added revenue due to high inventories and low profit margins.

Consumer industries, from textiles and garments, to foods, pharmaceutics and consumer electronics will be able to maintain relatively more sustainable growth.

In a breakdown, the industries the CASS researchers believed will maintain the highest growth include alcohol and beverages and "refined" tea drinks; machinery and equipment repair and maintenance; chemical products and synthetic fibers; pharmaceutics; computer manufacturing, telecommunications and other electronic equipment; and waste recycling.

The industries that are likely to suffer the largest setbacks are mainly mining and all related manufacturing, the tobacco and cigarette industry, automobile manufacturing and transportation equipment for railways, shipping and aviation, and some culture- and sports-related manufacturing activities.

Regionally, the nation's old industrial base in the northeastern provinces is under the heaviest downward pressure because of their concentration of big-smokestack industries, loss of human resources to other regions, and under-development of privately-owned small and medium-sized enterprises.

Consisting of Liaoning, Jilin and Heilongjiang provinces, the northeastern region has seriously affected the nation's average industrial growth, the report says.

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