中国制造商渐感艰辛

China’s Manufacturers Feel the Squeeze

It’s been a trying year for China’s manufacturers. Like many other businesses, they aren’t sure whether they should worry more about the U.S.-led global economic slowdown, or the surge in world commodity prices and domestic inflation. Two surveys suggest they’re weathering the slowdown in demand fairly well so far, but are getting punished by higher costs for raw materials.

The input costs index of the two purchasing managers’ index surveys – one published by the brokerage CLSA and the other by the China Federation of Logistics & Purchasing — hit 75.2 in April, on a scale where 50 indicates no change from the previous month. The CLSA survey also includes an index of output prices, which stood at 62.4.

The takeaway: Companies are raising the prices they charge, but their costs are rising even faster. That means narrower profit margins.

It’s looking like a trend. Government data for the first two months of the year showed profits at industrial companies grew only 16.5%, sharply down from last year’s 37% pace. The figure got a lot of attention (see previous coverage here and here), but numerous special factors - especially bad winter weather - raised the possibility that it could have been a statistical blip.

Those pricing trends are also contributing to the shrinking of China’s trade surplus in the first quarter of this year, as Goldman Sachs economist Hong Liang points out in a new report Friday. China imports mostly raw materials and exports mostly manufactured goods. The fact that the prices of the former are rising much faster than the latter is one reason why growth in imports, now around 30%, is now outpacing the expansion of exports, which is closer to 20%.

For worried investors, it’s worth noting that hard-hit manufacturers don’t dominate China’s stock markets, and finance and service-sector companies still seem to be doing pretty well. The 1,574 companies listed on the Shanghai and Shenzhen exchanges reported an average 49.7% growth in net profit in the first quarter of 2008, with earnings per share up 39.7%, according to estimates by the Shanghai Securities News this week.