In Dalian Bay, a modern equipment manufacturing base in northern China, hundreds of workers are working on a cargo containment system for a large liquefied natural gas (LNG) carrier, a flagship China-made vessel that sells well abroad.
Dalian Shipbuilding Industry Group Co., Ltd, the manufacturer in Liaoning Province, currently holds orders for 15 such large LNG carriers that can meet the storage and transportation demand at ultra-low temperature of minus 163 degrees Celsius, with delivery dates running up to 2028, said Mao Haibo from the company's LNG operating department. An epitome of China's high-end equipment, the LNG vessels have remained competitive globally as they demand precision manufacturing technologies and have high added value. Together with aircraft carriers and large cruise ships, it is known as the "three jewels in the crown" of the shipbuilding industry.
Driven by such cutting-edge technologies, China's equipment manufacturing sector posted a profit gain of 11.5 percent year on year in the January-May period, driving up the country's overall industrial profit by 3.6 percentage points as the largest contributor.
Electronics, transportation equipment and auto manufacturing were other main engines of industrial profit growth, while the raw material manufacturing sector came in as the major drag, with profits of the mining, fossil material processing and component manufacturing industries suffering major losses, according to the National Bureau of Statistics (NBS).
In general, the profits of China's industrial enterprises have posted slower growth, with the figure for the first five months down by 0.9 percentage points from that for the previous four months to 3.4 percent year on year.
Shen Jianguang, vice president and chief economist with JD.com, took the rising expenses mainly in raw materials, labor and manufacturing expenses as the direct cause, as the operating cost rate of industrial firms, measured by the ratio of operating costs to operating revenue, stood at 85.34 percent, a record high since November 2017.
But the fundamental causes, in Shen's point of view, could be more related to insufficient demand, low prices, and inadequate bargaining power, which have combined to squeeze on the profit margins.
Judging from the overall economic performance since last year, Mao Zhenhua, co-director of Renmin University's Economic Research Institute, said that the lack of demand, especially the lack of consumer demand, is tough, which manifests in lingering low prices and the low utilization rate of production capacity and might further constrain investment and production.
To break this dilemma, a meaningful rise in the final consumption demand is key, Mao said.
