In Q3 2008, the business survey conducted by the People s Bank of China collected 5000 responses, the result of which shows the following:
1. The macroeconomic index declined considerably, and the expectation of economic slow down for the next quarter intensified.
The survey shows that the macroeconomic index fell to 3.0 percent, representing a decrease of 9.3 percentage points from the previous quarter and a year-on-year decrease of 14.8 percentage points. The macroeconomic expectation index dropped to 1.3 percent, the lowest since the beginning of 2007, down 9.
0 and 13.8 percentage points from the previous quarter and the same period of the last year respectively. In Q3, the industry production expectation index declined by 2.0 and 3.2 percentage points from the previous quarter and the same period of the last year respectively, indicating that more entrepreneurs expected the economy would slow down in the next quarter.
2. Export order index continued to decline, and domestic order index experienced the first-ever drastic decline.
According to the survey, in Q3, export order index which reflects overseas demand registered 2.6 percent, and export order expectation index for the next quarter posted 4.0 percent, down 2.6 and 2.2 percentage points respectively from the previous quarter, reaching a historical low since the foreign exchange formation mechanism reform in July 2005.
Domestic order index, which reflects domestic demand stood at 9.1 percent, down 3.7 percentage points from the previous quarter, representing the largest decline in the past 10 years. Of 27 industries surveyed, domestic order indices of 21 industries decreased from the previous quarter.
3. The indices of the production materials composite price, the raw materials price and the production sales price declined.
In Q3, all the price indices of 5000 enterprises declined from high levels. The production materials composite price, the raw materials price and the production sales price indices registered 41.3 percent, 43.6 percent and 13.1 percent respectively, down 2.2, 2.9 and 2.4 percentage points respectively from the previous quarter. The expectation indices of these three prices for the next quarter stood at 34.3, 35.7 and 9.9 percent respectively, all below the expectation numbers for Q3, indicating that entrepreneurs expectation of future prices hikes moderated.
4. Enterprises profitability weakened due to the effect of the oil refining industry and the electricity, gas and heating generation industry.
According to the survey, enterprises profitability index dropped to 9.5 percent, down 1.3 and 8.2 percentage points from the previous quarter and the same period of the last year respectively. According to the financial data of the 5000 enterprises surveyed, the accumulated profits posted 482.314 billion yuan in the first seven months of 2008, representing a year-on-year growth of 7.
61 percent, down 33.4 percentage points from the same period of the last year. The reason behind the declining profitability was that the oil refining and the coking industry suffered huge losses in the previous quarter, while profitability of the electricity, gas and heating generation industry slid considerably.
Excluding these two industries, profits of other industries increased by 33.45 percent compared to the same period of the last year, up 12.27 percentage points from the growth of the same period of the last year.
5. Inventory, raw materials in particular, tied up more capital of enterprises, impairing capital flow and payment capacity.
In Q3, enterprises raw materials and finished goods inventories grew rapidly, freezing more working capital. According to the financial data, at end-July, the outstanding raw materials and finished goods inventories of the 5000 enterprises experienced a year-on-year growth of 32.07 and 21.5 percent respectively, up 19.
64 and 4.1 percentage points from the same period of the last year. Since most capital was freezed, enterprises payment capacity decreased. According to the survey, the payment capacity index in Q3 registered 22.0 percent, down 1.3 and 4.0 percentage points from the previous quarter and the same period of the last year respectively.
