Rising commodity prices are conducive to improving the profitability of upstream raw material enterprises and reducing debt risks. But for smes in the middle and lower reaches of the manufacturing industry, the profit space is squeezed and the game is intensified.
A few days ago, the Executive meeting of The State Council again named the price of bulk commodities, to do a good job in the market to ensure price stability. We will improve and implement measures to deal with price rises in major raw materials, reasonably increase domestic production, scientifically organize the release of reserves, and strengthen interconnected supervision of key commodity markets, "he said, releasing a strong policy signal that the state will continue to ensure stable supply and prices of major commodities.
Affected by the rapid economic recovery and internal and external factors, raw material prices rose sharply this year, high concussion. PPI rose 9.0% year on year in July, up 0.2 percentage points from June, according to the National Bureau of Statistics. The price of the means of production rose by 12.0%, an increase of 0.2 percentage points. The price of means of living rose 0.3 percent, the same as the previous month. From the manufacturing PMI in July, the purchasing price index of major raw materials and the factory gate price index stood at 62.9 percent and 53.8 percent, respectively, up 1.7 percentage points and 2.4 percentage points from the previous month. The purchasing cost of the manufacturing industry increased generally, among which the petroleum, coal and other fuel processing, chemical raw materials and chemical products, ferrous metal smelting and calendering processing and other industries were all higher than 70.0%.
The causes of the rise in raw material prices are complex. To a considerable extent, they are the result of the interwoven and superimposed effects of supply and demand mismatch, external input and speculation. The impact of rising commodity prices on China has both advantages and disadvantages. On the one hand, it is conducive to improving the profitability of upstream raw material enterprises and reducing debt risks. On the other hand, for msmes in the middle and lower reaches of the manufacturing industry, raw material costs account for the bulk of their costs and are very sensitive to price increases. The cost of operation brought by the rise in raw material prices is difficult for enterprises to digest in a short time, squeezing profit space. In terms of the profits of industrial enterprises in the first half of this year, the profits of upstream mining and raw material manufacturing enterprises increased significantly, while the profits of private, small and micro enterprises located in the middle and lower reaches of the Yangtze River recovered relatively slowly. The game between the upstream and downstream of the industrial chain is intensifying.
The CPC Central Committee and The State Council attach great importance to the impact of rising raw material prices on middle and downstream industries and micro, small and medium-sized enterprises. The Executive meetings of The State Council have discussed the issue of excessively rapid increases in commodity prices, and monetary policy tools such as cutting the reserve requirement ratio have been used to further strengthen financial support for the real economy, especially for small, medium and micro enterprises. In July, relevant departments released a total of 270,000 tons of copper, aluminum and zinc from two batches of state reserves, which released a positive policy signal of China's efforts to ensure supply and stabilize prices of bulk commodities and stabilized market price expectations. Targeted delivery also provides a window of opportunity for middle and downstream processing and manufacturing enterprises to replenish inventory and reduce the cost of raw materials for some enterprises.
Under the continuous force of the "combination of supply and price stabilization", the trend of PPI rising significantly in recent months began to stabilize. However, from the next stage, as the domestic economy recovers and the international commodity prices continue to rise, the prices of industrial goods will remain high for some time. This also means that the pressure on enterprises in the middle and lower reaches of the industrial chain, especially micro, small and medium-sized enterprises, may not be effectively relieved in the short term.
To prevent commodity prices from crushing micro, small and medium-sized enterprises, first of all, we should continue to remove the "empty fire". We will make solid progress in ensuring supply and stabilizing prices of major commodities, adopt a combination of measures to strengthen two-way regulation of supply and demand, and use market-based measures to guide upstream and downstream of the supply chain to stabilize the supply of raw materials and coordinate production and marketing. We will continue to strengthen joint oversight of the futures spot market, crack down on price gouging, hoarding and other illegal price practices, and maintain normal market order. Second, we should help enterprises build up their "vitality". We will implement planned measures to cut taxes and fees and curb arbitrary charges. On the basis of not flooding the economy, we will maintain the stability and effectiveness of monetary policy, further strengthen financial support for the real economy, especially for micro, small and medium-sized enterprises, and ensure that overall financing costs remain stable and lower. Again, the enterprise itself is also strong "internal force", take positive measures to tap potential, reduce costs and increase efficiency to overcome the current difficulties, but also to the pressure as a driving force, accelerate the pace of innovation and transformation.
