Overcapacity challenges the Chinese economy

Recently, Ni Kailu, the chairman of Chaori Solar Technology Co., Ltd., left behind the rumors of billions of debts “escaped” and caused an uproar. Although Ni Kailu returned to China on January 4 to break his "running road" rumors, the problem of tension in the super-day sun capital chain was also exposed. In the face of the overall dilemma of the photovoltaic industry, the Super Sun is obviously only the tip of the iceberg.

The data shows that China's largest 10 PV companies have accumulated debts of 110 billion yuan. In addition, there are a large number of accounts receivable, and the financial crisis of PV companies is even more severe. The author believes that the main cause of the high receivables operation and the tight capital chain of photovoltaic enterprises lies in the serious overcapacity, rather than the industry itself. After all, Buffett has just invested $2.5 billion to invest in the US solar industry.

Overcapacity has been a "disease" for China's industrial development in recent years. The most direct indicator of capacity utilization is capacity utilization, defined as the difference between actual production and optimal production capacity in a long-term equilibrium. The United States, Japan and other countries have long started industrial statistics and tracking analysis of capacity utilization indicators, which is a major monthly indicator for reflecting industrial economic strength and industrial economic trends. Unfortunately, the National Bureau of Statistics of China has not compiled and published this indicator.

Although China does not have indicators of overcapacity, both high-energy electrolytic aluminum, steel manufacturing, photovoltaic solar and wind power in emerging industries, and silicon steel in high-end products in the shipbuilding and steel industries are recognized by the industry as “overcapacity”. ".

In the traditional industry, according to the “First Half Report of China's Industrial Economic Operation 2012” issued by the Ministry of Industry and Information Technology, China's steel industry has over 160 million tons of overcapacity. Overcapacity of cement exceeds 300 million tons.

The disorderly expansion of electrolytic aluminum in the non-ferrous metals industry over the years has also led to the risk of long-term overcapacity. Its capacity utilization rate was nearly 90% in 2007, and it attracted many companies to build large-scale production capacity due to its lucrative profits. As a result, the capacity expansion has been too fast, and the capacity utilization rate of the industry has rapidly decreased. It has dropped to around 65% in the past two years.

Overcapacity in the steel manufacturing industry has been going on for several years. Before 2007, the utilization rate of crude steel capacity was above 83%. However, after 2007, the capacity utilization rate has reached a whole level and never returned to 80%, that is, long-term overcapacity. The embodiment.

There are also many cases in emerging industries. According to reports, the current capacity of the wind turbine manufacturing industry is idle more than 40%; the photovoltaic industry's production capacity is also seriously over-resourced. According to the statistics of more than 160 enterprises of the photovoltaic industry alliance under the Ministry of Industry and Information Technology, the production capacity has reached 35 GW, the national photovoltaic enterprise The total production capacity is around 40 GW, which is more than the total installed capacity in other countries in the world.

Overcapacity is the biggest challenge in the new government's macroeconomic regulation and control in the next five years. The development of overcapacity has reduced the company's investment expectations, and its solution needs to merge and close some factories, which will lead to unemployment and hit residents' income and consumption expectations, thus making economic growth face more and more obvious downward pressure.

The impact of overcapacity at the enterprise level, such as lower corporate net interest rates, increased liabilities, and an increase in accounts receivable, led to an increase in non-performing assets of the bank, which in turn passed the risk to the banking industry. Taking China's photovoltaic industry as an example, its annual growth rate has exceeded 100% for five consecutive years. In the context of a sharp fall in product prices, corporate profits have fallen sharply and even large areas have suffered losses. The huge debts have made enterprises as heavy as cattle. According to statistics, in 2010, the gross profit margin of the photovoltaic industry is still around 30%; in 2011, it will fall below 10%, and if the gross profit margin of enterprises in the industry is less than 10%, it is difficult to achieve profit; in the first half of 2012, overseas Among the listed PV industry stocks in China, the gross profit margin is as low as 1% or less, and some are even negative.

The government-led growth model is the institutional cause of overcapacity. It is manifested in the government's ability to intervene in investment and economic growth, and the formation of vicious investment competition between regions, making capacity expansion difficult to suppress. In particular, under the leadership of the “4 trillion” investment in 2009 and 2010, corporate profits improved, so the company’s investment in fixed assets rose enthusiasm; and 2011-2012 was the peak period for the release of capacity from the industry’s early investment, but at this time with the economy The quarterly decline in aggregate demand and the problem of overcapacity are becoming more and more prominent.

More than a decade ago, China had experienced overcapacity, but that was more of a cyclical cause. At the bottom of the cycle, it did show a problem of low capacity utilization, but the potential economic growth rate in the medium and long term did not decline or even Higher, capacity utilization is likely to rebound strongly as the economy recovers. However, from the cause of this round of overcapacity, we cannot automatically eliminate excess capacity by lengthening the economic downturn. China's current overcapacity is not a single economic cycle.

From the traditional steel, cement and other infrastructure industries to the photovoltaic industry and other high-tech industries that represent the future development direction of emerging industries, China's overcapacity is universal and comprehensive. However, China is now entering a period of economic transition. When overcapacity encounters economic transformation, overcapacity becomes a more difficult issue.

Therefore, the solution to China's overcapacity cannot be reversed from the traditional thinking of the economic cycle, that is, the aggregate demand expansion policy. Secondly, structural adjustment is not necessarily effective. In the high-end products areas of emerging industries and traditional industries, overcapacity is also the “hardest hit”. Therefore, the problem of overcapacity also highlights the policy problem. If the impulse of government investment is not restrained, the overcapacity will not be solved or even intensified, and the chain reaction triggered by it will not only restrict the economic growth rate, but also lead to the price of production factors. Distortion may have a more pronounced impact on corporate profits; if capacity is squeezed, the economy may experience a downturn.

Therefore, if the government only regulates, it can only alleviate the problem. If we want to solve this problem finally, it will be better than short-term pain. We must rely on the transformation of economic growth mode, change the local government promotion system and GDP The powerful control and influence of resources and production, speed up the reform of the market system and mechanism, further liberalize market access, strictly enforce the bankruptcy exit system, and rationalize the market price system and pricing mechanism, thus contributing to the market competition and the survival of the fittest.

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