China studying ‘extraordinary’ new policy support for manufacturers: Report

China is planning “extraordinary new policies to help downstream industrial firms that have seen their profits hit by the high cost of raw materials,” according to Shanghai Securities News.

The Ministry of Industry and Information Technology is studying measures to enhance the structure of supply-side policies, boost consumer demand and incentivize investments in technology, the newspaper said in a report Monday. The paper, which is managed by the official Xinhua News Agency, did not cite a source.

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Many downstream companies, including new energy vehicle makers, have recorded losses this year, the report said.

The article added that the profits of upstream firms as a share of the overall manufacturing sector rose to 47.4 percent in April, a historically high level.

Contractions in mid- and downstream sectors would lead to significantly weaker manufacturing investment in the second half of the year, which would deal a blow to the economy, the report cited Liu Xiangdong, deputy head of economic research at government think-tank China Center for International Economic Exchanges, as saying.

The government needs to stabilize the investment confidence of those firms and help them improve their rate of capital turnover by solving issues such as overdue receivables, the report cited Liu as saying.

“Authorities should also help stabilize investment by boosting consumer spending on new energy cars, environmentally friendly construction materials and home appliances,” said Li Hongtu, chief economist of financial information provider Bolan Finance, according to the report.

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