The mainland faces a daunting challenge rejuvenating its manufacturing sector amid falling exports and serious overcapacity, the Ministry of Industry and Information Technology said yesterday.
'This year will be the most difficult one for the manufacturing industry since the beginning of the new century,' the ministry said in a sombre report, which contrasted starkly with recent upbeat comments from officials and economists. 'Although some positive changes have showed up in the economic development, the foundation [for a recovery] is still not firm.'
In an uncharacteristically bearish report on industrial production, the ministry said domestic demand held the key to a turnaround.
At the end of last year, Li Yizhong (right), the industry and information technology minister, told a conference that 2009 would be 'extremely difficult' because the country intended to maintain a high level of growth of industrial production.
Yesterday's report came as government officials and economists have been beating the drum for economic recovery after the stimulus package started to show an impact on gross domestic product growth.
The equity and property markets have also taken a bullish turn lately as investor optimism improved.
'The ministry's prediction is well-grounded,' said Liu Zhongyuan, the chief economist at Xiangcai Qinan Futures. 'The overcapacity problem is serious and there's no way that an investment-driven growth could be sustained.'