Investigation and Analysis on the current situatio

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Investigation and analysis of the current situation of China's manufacturing industry in the post epidemic period

what is the pace of resumption of work and production of manufacturing enterprises after the epidemic? Has the epidemic accelerated the transfer of the industrial chain? How about the employment situation in the manufacturing industry? How much government and financial support? Why did the export exceed expectations? Is the current increase in export share sustainable? The CICC macro team combined top-down and bottom-up, disassembled macro data, and visited more than 20 manufacturing enterprises and an industrial park, involving pharmaceutical, chemical, communication electronics, software, ports, textiles, auto parts, mechanical equipment, home appliances, smart home and other industries, in order to deeply understand the post epidemic recovery trend of China's manufacturing industry and study and judge the export trend next year

the manufacturing industry showed a steady recovery trend

during the epidemic this year, a large number of manufacturing enterprises stopped production. In order to ensure that production and business activities return to normal as soon as possible, the Chinese government assisted enterprises in many ways to resume work quickly. In the survey, enterprises generally reported that they had resumed work quickly after March, and most enterprises felt that demand was recovering steadily, but the range was differentiated. Large and medium-sized manufacturing enterprises have not seen large-scale layoffs, and some enterprises even have the problem of structural recruitment. After the epidemic, the differentiation of large and small enterprises has intensified, and the concentration of some industries may rise. In terms of external environment, the interviewed enterprises said that they felt more about government support, and the financing environment improved significantly

(I) rapid resumption of work, resumption of production differentiation

during the epidemic, the government made three efforts to assist enterprises to resume work. First, provide epidemic prevention materials (such as masks and disinfectants) for enterprises to ensure that they have the conditions for resumption of work; The second is to establish a cross regional employment coordination mechanism and organize international charter flights and trains for poor traffic; Third, coordinate the upstream and downstream industrial chains to resume work together. The interviewed auto parts companies said that they provided the relevant government departments with a list of enterprises with large upstream and downstream connections when resuming work, and the government focused on solving the difficulties for these enterprises to resume work in the same period. Auto parts companies said that although the impact of the epidemic caused their production capacity to recover to only 40% in February, with the support of the government, the production capacity has basically returned to normal in late March

new and old infrastructure has a strong driving effect on related manufacturing orders. Taking a power and communication equipment manufacturing enterprise as an example, the performance of the company in the first half of the year showed obvious differentiation between different business segments. Driven by the new infrastructure, the demand for UHV products continued to increase, and the company's operating revenue of smart electricity and system integration in the first half of the year increased by 20% year-on-year; The company has won a number of offshore wind power projects, and the revenue of offshore power and system integration increased by about 40% year-on-year; However, the company's traditional optical fiber and cable business income was affected by the epidemic and the adjustment of supply and demand in the optical communication industry. The product price fell, and the operating income of this sector fell

auto parts and refining and chemical leaders performed well. An auto parts enterprise believes that in the early stage of the epidemic, order production fell due to insufficient labor supply, and the company's production capacity recovered steadily after March. Since April, due to the substitution of private cars for public transport after the outbreak of the epidemic and the relaxation of government purchase restrictions, orders and production capacity utilization have recovered rapidly. In the first half of the year, the company achieved a revenue of 400million yuan, a year-on-year decrease of 10%, of which the receivables in the second quarter increased by 3% year-on-year. At the same time, the company expects the company's revenue to continue its good performance in the third and fourth quarters

textile and clothing export enterprises recovered slightly slowly. In 2019, 50% of the main business income of a textile enterprise came from overseas. The outbreak of the overseas epidemic led to the contraction of global textile demand, and the business income of the enterprise fell by 8% year-on-year in the first half of 2020; Net profit decreased by 40% year-on-year. Facing the uncertainty of the overseas market, the textile enterprise actively adapts to the changes, enriches the product line, cooperates with customers to switch to gauze for masks and protective clothing, and develops antibacterial series products to hedge the adverse effects of the epidemic. Enterprises feel that the traditional textile export orders began to improve in July and August, and the distribution demand in the Christmas consumption season in the United States increased. The current capacity utilization rate is about 80%, which is lower than the peak season level last year, but higher than the average level last year

special on-site operation enterprises have a slow way to resume production, and enterprises are also actively seeking business transformation. A medical software enterprise is engaged in the construction of hospital informatization. During the epidemic, the hospital implemented strict prevention and control measures, and the construction of the informatization system of each department was forced to stop. In view of this, the company has shifted its focus to the research and development of customized products

(II) stable employment and industry integration

there were no large-scale layoffs in the surveyed enterprises, mainly for the following three reasons. First, after crossing the Lewis inflection point, the bargaining power of the demander in the manufacturing labor market has declined. An auto parts enterprise said it hoped to retain skilled workers, but after the epidemic, some workers in Sichuan and Chongqing may choose not to come back. The industrial relocation in the past few years has also made many central and Western labor forces employed nearby. Second, the improvement of manufacturing automation has enhanced the resilience of enterprises in the cost of employment. A chemical enterprise said that the automation and intelligence level of the company's production has been greatly improved, and the overall demand for labor is small. Even if the epidemic causes enterprises to reduce production, enterprises can also choose to work less overtime and take more holidays to temporarily respond to the crisis. Third, some enterprises sensitive to labor costs have previously transferred their industrial chains to Southeast Asia. However, it should be noted that the objects of this survey are mostly large and medium-sized manufacturing enterprises, and the labor market situation of some service industries and small and micro enterprises under the impact of the epidemic may not be so optimistic

the epidemic may accelerate the exit of long tail enterprises in the industry and intensify the liquidation of production capacity. The interviewed auto parts enterprises said that the recovery in demand since April was mainly due to the resumption of orders from head auto brands, the obvious decline in orders from long tail small customers, and the risk of default in accounts payable. The tail enterprises have a low market share, which makes it difficult to achieve large-scale production. Insufficient R & D investment leads to the lack of necessary technology accumulation. When the epidemic leads to drastic changes in the external economic environment, the liquidation may be accelerated. The concentration of some industries may rise. The interviewed chemical enterprises said that the 2.5 million ton PTA plant has a cost advantage of 200 yuan per ton compared with the devices with less than 2 million tons on the market, but the current price is difficult for small enterprises with less than 2 million tons to make profits. The old production capacity is lack of competitiveness, and the scale advantage of enterprises depresses the market price, which promotes the clearing of industrial production capacity and the improvement of leading concentration. An electronic enterprise said that compared with its competitors, leading enterprises invest more resources and funds in the development of medium and high-end products. The relative competitiveness is mainly reflected in the reliability of products and the stability of equipment. Although the relative cost is higher, the overall profitability and development potential are superior. The application scenarios of 5g and new infrastructure put forward higher requirements for chip design, and the advantages of leading enterprises deeply engaged in medium and high-end products will be more obvious compared with small and medium-sized enterprises that focus on production side cost control

(III) enhanced feeling of government support

in terms of the external business environment, the interviewed enterprises said that their feelings of government support were mainly reflected in tax reduction and fee reduction and financial support

in terms of tax reduction and fee reduction, enterprises have the strongest sense of access to social security fee reduction. A software enterprise and an electronic enterprise also said that the government support during the epidemic period was mainly social security relief. The interviewed Industrial Park has multi-dimensional and universal support policies for enterprises, such as periodic rent reduction, return of enterprise recruitment fees, measurement and judgment of various performance parameters and subsidies of various material experiments according to national standards, international standards or standards provided by users, so as to ensure that the support policies benefit as many enterprises in the park as possible. With the improvement of enterprise management, these policies have been gradually withdrawn. According to the data of the Ministry of finance, in the first half of this year, the newly introduced policies and measures to support epidemic prevention and control and economic and social development increased tax cuts and fees by 894.1 billion yuan, of which, from February to June, the three social insurances reduced the social security expenses of enterprises by 576.9 billion yuan and deferred payment by 43.1 billion yuan, effectively alleviating the financial pressure of enterprises

in terms of financial support, the sense of financing access of small and micro enterprises and manufacturing industry has increased this year. Taking the situation of an industrial park as an example, the park has established a special communication mechanism between banks and enterprises, strengthened the monitoring of enterprise loan data in the park, and timely tracked and fed back the financing demands of enterprises. The park also vigorously promoted the establishment of a risk compensation fund pool, strengthened cooperation with financial institutions, and solved the financing and credit of nearly 4billion yuan for more than 500 private enterprises during the epidemic through the mode of risk sharing. Aiming at the pain points of insufficient collateral for small and micro enterprises and asymmetric information between banks and enterprises, the park cooperates with a data platform to match appropriate credit resources for small and micro enterprises with the help of multidimensional data such as the basic situation of enterprises and business information collected by the platform. When lending, financial institutions create accurate portraits and scores of small and micro enterprises through extensive alliances and big data analysis, so as to guide lending behavior and open up the last mile of financing for small and micro enterprises

overall, the financing environment of enterprises has improved significantly. The interviewed banks said that they have substantially relaxed the scoring of qualified small and micro enterprises through digital portraits, and tracked down the scoring standard according to the bad debt rate. In the short term, regulators have increased their tolerance for non-performing loans of small and micro enterprises (the non-performing rate is no more than 3%); In terms of long-term mechanism, the regulatory incentives brought by the "measures for the supervision and evaluation of financial services for small and micro enterprises of commercial banks" issued in July ensure that banks have the motivation to better serve small and micro enterprises on the premise of controllable risks. The financing of large and medium-sized enterprises surveyed is generally priced near LPR. During the survey, enterprises believed that the interest rate fell significantly in the first few months of this year. A pharmaceutical enterprise said that bank financing has improved a lot, but banks only borrow operational loans, and M & A loans are not approved temporarily. The loan interest rate fed back by the interviewed large and medium-sized enterprises basically fluctuated between 3.6% and 4.2%, which was equivalent to the one-year loan market quotation rate (LPR). The weighted average interest rate of corporate loans in the second quarter was 4.64%, down 0.48 percentage points from the end of the previous year, exceeding the decline in LPR in the same period

exports are expected to maintain a high growth rate

since the second quarter, China's export growth has continued to exceed expectations, and its share in the world has risen rapidly. Export enterprises were greatly affected by the domestic epidemic in the first quarter; Since the second quarter, the epidemic in China has been basically controlled, and the rapid recovery of China's exports has been driven by the resumption of domestic production, the growth of consumer demand in the United States and Europe, and the pause in overseas production; Since the third quarter, enterprises have basically continued the growth trend in exports. China's complete industrial chain, developed cross-border e-commerce, and government policy support are important factors supporting exports. Since the outbreak of covid-19, the Chinese government has continuously increased the supply side policy coordination and support, and established a sound epidemic prevention and control mechanism. Thanks to the support of various policies, a good industrial foundation and the development of cross-border e-commerce, China was able to take the lead in resuming production. During the outbreak of the overseas epidemic, China has become the most stable supplier in the world. From March to July this year, China's exports of goods accounted for 16% of the global share, significantly higher than the 13% in 2019

(I) the epidemic accelerated export transfer and import substitution

a manufacturer of special equipment parts said that due to the company's competitors are mainly concentrated in India, the epidemic has led to a decline in the production capacity of Indian factories, and downstream customers have successively transferred orders to China since May. A color TV enterprise also said that since the second quarter, China has provided

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