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Accurately Remove Difficulties Restricting the Profitability of Enterprises and Effectively Improve the Profitability of Manufacturing Industry -- Conclusions based on micro data analysis of 29 industries (No.221, 2019)


By Sun Zhiyan, Research Department of Development Strategy and Regional Economy, DRC & Liu Chenchen, Zhengzhou University

Research Report, No.221, 2019 (Total 5721) 2019-12-12

Abstract: Over the past few months, the debt scale of China's manufacturing enterprises has tangibly expanded and their profitability has declined significantly. Viewing from the analysis of the micro data of 29 enterprises of manufacturing industry above designated size from 2008 to 2018, financial expenses and land taxes are the most significant external cost factors influencing the overall profit level of manufacturing industry. In view of this fact, this paper proposes the following policy options. First, the government needs to strengthen the supervision of non-essential business investment of manufacturing enterprises, precisely meet the financing needs of enterprises and refine relevant financing policies; second, it needs to expand the scope and proportion of value-added tax (VAT) deduction for small and medium-sized enterprises (SMEs) and hi-tech industries; third, it needs to accelerate the establishment of a new generation of industrial policy system with the supply chain at the core, actively guard against supply chain risks caused by the division of labor in the global value chain and the monopoly of "super companies" on technology and market, and avoid the whole industry falling into the mid-to-low tech trap.

Key words: manufacturing industry, value-added tax, supply chain risks