Business / Economy

Emphasize real economy: Entrepreneurs

By Zhao Shengnan (China Daily) Updated: 2014-04-08 07:25

Emphasize real economy: Entrepreneurs

Chinese entrepreneurs have called for the placing of more importance on the contracting real economy to boost growth amid concerns about the country's economic slowdown.

"A healthy market economy relies on both a real and virtual economy, but the real one is the fundamental basis, serviced and pushed forward by the highly efficient virtual one," said Gao Dekang, founder and chief executive officer of Bosideng Group, China's largest down clothing maker.

But the real economy, primarily the manufacturing industry, has been under "unprecedented" attack in recent years because of factors including soaring costs and an appreciating currency, said Gao.

Emphasize real economy: Entrepreneurs

Emphasize real economy: Entrepreneurs
World Bank pares 2014 outlook 

Gao's warning came after a string of economic indicators suggest China's first-quarter growth may have slipped below the annual target of 7.5 percent.

The latest evidence can be found in the manufacturing Purchasing Managers' Index, a key measure of factory activity in China.

The official PMI for March, compiled by the National Bureau of Statistics and the China Federation of Logistics and Purchasing, edged up 0.1 of a percentage point from February to 50.3. The reading, the first rise since November, is a touch above 50 - the expansion/contraction watershed.

The HSBC/Markit PMI, which sampled small and medium-sized enterprises, dipped to an eight-month low of 48 in March, from a final reading of 48.5 in February. It also signals the sharpest fall in output since November 2011.

That, combined with other weak indicators ranging from industrial production, fixed asset investment to power consumption, all painted a murky picture of the economy.

According to Gao, SMEs currently have slim profit margins, while the large listed ones suffer from overcapacity and a lack of innovation. Burdened by the sharp appreciation of the yuan, a glut of enterprises that heavily relied on exports have gone bankrupt.

"A number of enterprises have shifted their investment focus to real estate, bank financing and trust funds. The reason is very simple: They can barely profit from developing real enterprises," he said.

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