According to the data released by the National Bureau of Statistics on April 27, from January to March, the total profits realized by industrial enterprises above designated size (hereinafter referred to as "industrial profits") increased by 11.6% year-on-year, and the growth rate slowed down by 4.5 percentage points from January to February. . The year-on-year growth rate of industrial profits in March was only 3.1%, showing signs of slowing down.

According to the interpretation of Dr. He Ping from the Industry Department of the National Bureau of Statistics, the year-on-year growth rate of industrial profits in March fell by 13 percentage points compared with January-February. There are three main reasons. One is the impact of the postponement of the Spring Festival. In March, there were still some enterprises that had not resumed work; second, the price increase of industrial products fell back, and the year-on-year increase of PPI in March was lower than that in January-February; third, exchange losses and other factors increased financial expenses.

If the above three factors are excluded, the growth rate of industrial profits in March would not have dropped so sharply. However, the growth in the first quarter shows that the growth rate of industrial profits this year will be significantly slower than last year. The year-on-year growth rate of industrial profits in the first quarter of last year was as high as 28.3%, compared with 21% for the whole of last year, and may fall back to around 10% for the whole of this year. Industrial profit is equal to the main business income multiplied by the profit margin of the main business income. Decomposing it with this formula, the profit rate of industrial enterprises in the first quarter of this year was 6.18%, which was a slight increase from 6.13% in the same period last year. Therefore, the industrial profit slowed down. The reason is that the growth of main business income has slowed down. In the first quarter of this year, it increased by 9.6% year-on-year, which was lower than the 14% in the same period last year. This shows that the profitability of industrial enterprises has not weakened, but the growth of market demand has slowed down.

The rapid growth of industrial profits last year was mainly due to the high increase in PPI. On the one hand, it increased the main business income, and on the other hand, it enhanced the profitability of industrial enterprises. The profit margin rose from 5.97% in 2016 to 6.46% in 2017. In the past few years, PPI has basically dominated the fluctuation of industrial profit growth. Since March 2012, the year-on-year negative growth of PPI has led to a year-on-year decline in main business income and industrial profit margins. In 2015, industrial profits even experienced negative growth. In 2016, destocking began, and PPI showed a positive month-on-month growth. Negative to positive, driving the main business income and industrial profit margins have gradually increased. This year's PPI growth rate will drop significantly, so the slowdown in industrial profit growth can also be expected.

Through the fluctuations caused by PPI, we can see that industrial growth has undergone a transition from ultra-high-speed growth to medium-to-high-speed growth, and it may tend to be basically stable after this year. For many years before 2011, the annual growth rate of the main business income of industrial enterprises above designated size was more than 20%; after 2012, it slowed down to single digits year by year, with an increase of only 0.8% in 2015; After that, it began to rebound, but in 2017, when the PPI rose as high as 6.3%, the main business income only increased by 11.1%. Judging from the growth rate of the output of major industrial products, many of them were low growth or even negative growth. In 2017, only a few industrial products such as room air conditioners and integrated circuits had double-digit growth rates.

It can be said that my country has entered a period of relative saturation of industrial products. In 2013, there were 116 color TV sets per 100 households, and 121 in 2016; in 2013, there were 203 mobile phones per 100 households. In 2016 it was 235. Many industrial products had a high popularity a few years ago, so there has been no rapid growth since then. Then, the growth of the industry will inevitably slow down and enter a "new normal". Of course, certain industrial products—such as air conditioners and integrated circuits mentioned above—will still have relatively fast growth, but overall, the growth rate of industry will be much slower than before.

The ultra-high-speed growth of my country's economy before was largely driven by the ultra-high-speed growth of industry. As industrial growth decelerates, there may be a mindset of looking for high-speed growth drivers, and thus no longer pay attention to industry (mainly manufacturing). In modern society, people pay more attention to "fast variables" and ignore "slow variables"; they pay more attention to "margin" and ignore the foundation or core; they pay more attention to increments and ignore stocks. This is true for local governments whose economic growth is an important achievement, they prefer fast-growing industries; it is also true for investors who aim at asset appreciation, they are keen to invest in projects with room for imagination. Then, when the industry no longer has the impetus for rapid growth, it may be ignored by local governments and investors, and various resources will go away from the industry. This situation has already appeared in developed countries, and many manufacturing industries have been transferred to developing countries such as China. However, the industry that has entered a stable state is still very important to the economy and society. People's demand for industrial products will slow down but will not decrease, and the employment opportunities provided by industry are also indispensable. Without the stable growth of industry, the economy Growth will not be sustainable, and society may also fall into severe division. This is a problem that developed countries have to face.

When my country's industrial growth has entered the "new normal" and the economy has also entered the "new normal", we should consciously pay attention to the "slow variable" industries. Under the requirements of high-quality growth, stock optimization is very important, and the emphasis on incremental or growth should be moderately weakened. In the future, it will be difficult for the industry to provide strong economic growth momentum in terms of increments, but it can contribute to more environmentally friendly, fairer, and more efficient development in stock optimization.