Beijing lines up measures to aid key industries
The central government has pledged to launch more measures to support key industries such as steel and cars after warning that factory output and corporate profits are continuing to weaken.
Li Yizhong, the Minister of Industry and Information Technology, said annual industrial output growth fell further last month from October's 8.2 per cent and some industries such as steel, petrochemical and non-ferrous metals were in the red this year.
'In solving our growth problem, industry is the focal point,' Mr Li said yesterday. 'Some companies have stopped or cut production. Some have gone bankrupt or been bought out.'
He added there had also been some lay-offs and pay cuts for migrant workers, with small and medium-sized enterprises having been particularly hard hit.
Senior officials have voiced confidence that the mainland can achieve a growth target of 8 per cent next year despite the economy suffering its deepest slump in a decade. Eight per cent is the minimum growth rate needed to create new jobs.
'Overall, the economy will see a low rate of growth in the first quarter next year and then it will gradually stabilise and start to pick up,' said Liu He, a deputy minister of the Central Leading Group for Financial and Economic Affairs.
Mr Liu said it was possible to achieve a growth rate of more than 8 per cent next year. 'We should trust the central government's ability to deal with the economic problems in a flexible and determined manner.'
Mr Li said industrial production had not bottomed and would take a further hit this month. Industrial output in October reached the lowest level in seven years, a sharp slowdown from the 11.4 per cent growth in September, prompting the government to rush to plans for its 4 trillion yuan (HK$4.53 trillion) stimulus package.
The National Bureau of Statistics will release last month's production figures on Monday.
Sun Mingchun, the chief China economist at Nomura International, said he expected the production slowdown to continue until the second and third quarters of next year.
Mr Li said the government was working out new measures to support industry, including improving the credit environment for businesses and giving targeted assistance to specific sectors.
He said the government would expand loan guarantees as commercial banks were still reluctant to lend. He estimated that such guarantees would increase significantly this year from the 800 million yuan it extended last year.
Mr Li said the government might take further measures to revive its steel industry, the world's biggest, which could suffer an overall loss in the next half. 'We should roll out policy incentives.'
He added the government would set up a 15 billion yuan fund to support technical upgrades.