Dipping profits of private firms wake-up call for authorities

According to the National Bureau of Statistics, the total profit of China's industrial enterprises above the designated size reached 4.27 trillion yuan ($631 billion) from January to June, up by 1.0 percent year-on-year, but the total profit registered by foreign-funded enterprises and those from Hong Kong, Macao and Taiwan was 981.40 billion yuan, down 13.9 percent, and that of private enterprises was 1.19 trillion yuan, down 3.3 percent.

The decline in the profit of foreign-funded companies and those from Hong Kong, Macao and Taiwan can be attributed to the fact that the sales of their products are mainly oriented toward foreign markets, whose full recovery still depends on the international situation improving, and the openness and inclusiveness of developed markets increasing. If developed markets still cling to trade protectionism, continue to suppress Chinese enterprises and adopt stern technological protection measures, the exports of these enterprises will continue to face severe tests.

The declining profits of private enterprises must propel the authorities to find solutions. Compared with micro, small and medium-sized enterprises, enterprises above the designated size have stronger anti-risk ability and higher ability to adapt to market changes. However, compared with State-owned enterprises, the private enterprises above the designated size still have a big gap in profitability and are failing to quickly realize a positive profit growth.

Private enterprises are mostly medium, small and micro ones distributed in all walks of life, so their poor operation will have a great impact on the economic development, social stability and residents' life. There are multiple reasons for the weak profitability and negative profit growth of private enterprises in the first half of the year, the lack of demand being a major one, especially in those places seriously affected by the epidemic, where people's consumption motivation is not strong.

Another major reason is the rising price of domestic commodities such as coal, because of a rise in international prices. As a result, upstream enterprises have raised prices, thus greatly affecting private enterprises.

The authorities should pay attention to the weak profitability of private enterprises, take more active and effective measures, and, if necessary, give preference to private enterprises. They should in particular prevent State-owned and large enterprises from harming the interests of private enterprises, and protect their rights and interests according to law.

BEIJING YOUTH DAILY