Profits Concentrate in China's Monopolistic Sectors

Strategic Insights -

Chinese enterprises saw a 25.5% increase in profits in the first five months of 2006, but the majority of this growth was concentrated in the five major sectors of oil, electric power, coal, and nonferrous metals. The top five sectors in growth were nonferrous metals, electric power, machine building, petroleum, and petrochemicals, with growth rates of 56.3%, 44.5%, 37.8%, 29.5%, and 19.9%, respectively. The profits of these monopolistic sectors have more and more concentrated in the five major sectors, leading to a worrisome situation for industrial enterprises in achieving sound development.

Key Takeaways:

  • In the first five months of 2006, the profits of Chinese enterprises increased by 25.5%, with more than 80% of the increased profits concentrated in the five major sectors of oil, electric power, coal, and nonferrous metals.
  • The 451 major state-owned enterprises monitored by the State-Owned Assets Supervision and Administration Commission (SASSA) generated 3849.35 billion yuan ($US481.5 billion) in main operating turnover in the first five months, jumping 19%.
  • The eight monopolistic sectors such as petroleum, petrochemicals, telecoms, and electric power each made profits exceeding 10 billion yuan, totaling 284.81 billion yuan, accounting for 85.9% of the profits of the major state-owned enterprises.
  • The profits of China's monopolistic sectors reported sharp rises of profits in the first five months of this year, while profits of major state-owned enterprises have more and more concentrated in the monopolistic sectors.
  • The long-time high purchase prices of energy, raw materials, and power are closely related to the monopolistic sectors, posing a worrisory situation for industrial enterprises in achieving sound development.
  • The factory prices of industrial products have risen only 2.6%, much lower than the 5.9% of purchase price of raw materials, leading to a "scissor gap" between factory price and purchase price.

Statistics:

  • 25.5%: Increase in profits of Chinese enterprises in the first five months of 2006 (NBS)
  • 80%: Share of increased profits concentrated in the five major sectors (NBS)
  • 3849.35 billion yuan: Main operating turnover of 451 major state-owned enterprises in the first five months (SASSA)
  • 19%: Growth rate of main operating turnover of major state-owned enterprises (SASSA)
  • 284.81 billion yuan: Total profits of eight monopolistic sectors (SASSA)
  • 85.9%: Share of profits of major state-owned enterprises accounted for by monopolistic sectors (SASSA)
  • 56.3%, 44.5%, 37.8%, 29.5%, and 19.9%: Growth rates of nonferrous metals, electric power, machine building, petroleum, and petrochemicals, respectively (SASSA)
  • 2.6%: Increase in factory price of industrial products (NBS)
  • 5.9%: Increase in purchase price of raw materials (NBS)

Sources:

  • National Bureau of Statistics (NBS)
  • State-Owned Assets Supervision and Administration Commission (SASSA)
  • Xinhua Net (XIC)