Chinese industrial companies are experiencing robust profit growth in the first two months of 2017. In January and February, industrial enterprises reported a 31.5% increase in profit from the same period last year, reaching a total value of 1.02 trillion Yuan ($148.5 billion). I strongly believe that, this time, China is serious about it. China Manufacturing 2025 is a real thing and not the usual initiative aimed at pleasing the desire to enhance soft power and find objective to dissuade attention.
National Development and Reform Commission and the Ministry of Industry and Information together determined to set higher electricity price for obsolete equipment in steel manufacturing. It is argued that this policy is in favor of big manufactures while small companies will be worse off. I think this is a small step in the attempt to get rid of old production methods and it could be praised. The problem, as in most similar situation, lies in understanding how the rationale and cut-off points were decided.
China aims to optimize the structure of its coal production by reducing outdated capacity. Total coal output will stand at about 3.9 billion tons in 2020, compared with 3.75 billion tons in 2015, while China will consume 4.1 billion tons of coal, up from 3.96 billion tons in 2015. I think it is a good step to reach the double objectives of: 1) Reduce of the capacity. 2) Move to clear energy sources. Still even consider this reduction of 2020 objective, coal energy production still represent a large proportion of overall energy sector, so still more needs to be done.
Shanghai Stock Exchange on 28th Oct published policy on strengthening the credit contro over supply-excessive industry, including real estate, iron and coal industries. This action will restrict debt release of companies in those industries and underwritters have to examine clearly before they help issue debt of companies.