The “Eleventh Five-Year Plan†economic growth target for various places has generally surpassed the central government's overall target of 1-2% or even higher. The National Development and Reform Commission recently issued warnings to local governments to “decelerate†GDP growth.
Since then, the reporter has learned from the National Development and Reform Commission that the "Circular on Accelerating the Opinions on the Structural Adjustment of the Automobile Industry" ("Notice") will be issued in the near future. Obviously, the state will have to impose restrictions on the local auto investment that drives GDP growth.
During the "10th Five-Year Plan" period, local governments were eager to participate in industrial investment in pursuit of GDP growth, resulting in the expansion of the production capacity of the automobile industry. According to statistics, there are currently 200 vehicle manufacturers in China. There are 27 provinces (municipalities) producing cars, 17 provinces (cities) producing cars, and 23 provinces (cities) have built car production lines.
The latest statistics released by the People's Bank of China on February 21 showed that in 2005 China’s auto industry invested more than 100 billion yuan, and its auto production capacity increased to 8 million. According to report, many local governments still listed the auto industry as a key investment development project during the “11th Five-Year Plan†this year.
Bad consequences have already emerged. According to statistics from the China Association of Automobile Manufacturers, in 2005, 6315 automobile industry enterprises across the country, on the basis of a 8.60% year-on-year increase in total industrial output value, the total industry profit decreased by 24.33% year-on-year, a net decrease of 16.922 billion yuan; 10.64%, 5.02% lower than the same period of last year. In the industry, 14 key enterprises (groups) realized a total profit of 23.496 billion yuan, a year-on-year decrease of 39.89%, a decrease of 15.59 billion yuan, and a return on net assets of 8.89%, a year-on-year decrease of 7.62 percentage points. In the case of sharp decline in profits across the industry, there were 1,155 auto companies in the industry suffered losses, an increase of 63 over 2004, a loss of 18.29%, a year-on-year increase of 0.87 percentage points, a loss of 9.657 billion yuan, an increase of 35.10% The loss increased by 2.509 billion yuan.
Not only that, the adverse effects of overcapacity in the automotive industry continue to show up this year. According to statistics from relevant departments, in the first quarter of this year, the auto market added 30,000 new inventories, of which only 20,000 were newly added in March.
Some people do not understand that the auto industry is a completely competitive industry, and the main body of the market economy should adjust the production capacity by itself. In response, a drafter of the “Notice†told reporters that China’s transition from a planned economy has been unreasonable in terms of its investment and financing system and its management mechanism is not yet perfect, which has caused local governments to have strong impulses for auto investment. The main source of current fiscal revenues at all levels of government is VAT and business tax. This means that as long as you invest in projects, especially industrial projects, as long as the company starts and puts into production, regardless of whether it is profitable or not, it must pay taxes to local governments according to the scale of production. In the hands of local governments, the price of the necessary factors for the production of land, etc., has become a “cake†for attracting investment. The investment enthusiasm of local governments has caused waste of resources, but also caused the fragmentation of markets across the country, which has affected the overall technological progress of automobiles. Therefore, the role of the market alone is difficult to promote structural adjustment.
Reasonable market competition is the process of “big seas scouring the sandâ€, which is an ironclad economic law. Losing a company is also normal. However, it should be noted that the economic system of the domestic market has yet to be improved, and people's ideas and awareness have yet to be changed. The color TV industry is regarded as a model of market competition, but the shadow of capacity expansion in the last century still leaves traces. China's color TV domestic market has a market capacity of 35 million to 40 million units a year, plus exports of 80 million units, and color TV companies claim that their production capacity has reached twice the number or even more. The direct consequence of inconsistent production and marketing is the sharp increase in stocks and price wars. The thin paper profits prevent companies from investing in new technology development.
The case of color TV industry is worth thinking about the automotive industry, and now is an important point of the country's economic development and transformation, and it is also the time to lay the foundation for the country's "Eleventh Five-Year" development. As Guo Guobao, deputy director of the National Development and Reform Commission, said at the end of March in Hefei, China, at the “2006 Annual Conference of the Chinese Automobile Industry and the Fourth Session of the 5th Board of Directors (Expansion) Conference of the China Automobile Industry Associationâ€: The auto industry is an industry that has a particularly big impact on the national economy. Large correlation, upstream and downstream industry linkages; 1 out of every 6 people employed is related to automobiles; large contribution to society, consumption tax is 30 billion yuan a year, and 600 billion yuan is spent on road construction by the Ministry of Communications, mainly from acquisition costs The levy.
Such a large associated effect can easily affect the nerves of deflation. Therefore, the purpose of structural adjustment can only be achieved by combining the market's "invisible hand" with the government's "visible hand". It is not difficult to understand why the NDRC is anxious to issue the "Notice" at this time.
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