China Watch Blog

China Watch Blog has learnt that China’s electronics and information technology (IT) sector continued to expand in the first eight months of this year but companies faced growing pressure from higher costs and slower income.

The value-added output of manufacturers in the sector rose 15.5 percent year-on-year in the Jan.-Aug. period and sales value increased 22.3 percent year-on-year, the Ministry of Industry and Information Technology (MIIT) was quoted as saying in a China Daily report.

During that period, exports of electronics and IT products climbed 15.5 percent year-on-year to 420.9 billion U.S. dollars, said the MIIT.

Meanwhile, 21.8 percent of the sector’s companies were in the red in the Jan.-July period, with their combined losses surging 73.7 percent year-on-year, according to the MIIT.

The electronics and IT companies were facing increasing costs, said the ministry.

In July, the sector’s revenues grew 18.3 percent year-on-year, down 5.5 percentage points from June, according to the statistics.

China Watch Blog has learnt that two biggest railway construction contractors have been forced to suspend some of their projects after the Ministry of Railways delayed payments to them.

Wang Mengshu, academician of the Chinese Academy of Engineering, was quoted by the Economic Information Daily as saying that the ministry is holding back 60 billion yuan ($9.38 billion) in payments to China Railway Group Ltd (CRGL) and China Railway Construction Corp Ltd (CRCCL).

The report is the latest sign that the ministry is under increasing financial pressure after a series of problems on China’s high-speed rail system this year, including a major fatal collision in July, hit investor confidence and forced the nation to reconsider its high-speed rail investment, the China Daily reported.

“Building railways requires a lot of investment, but monetary policy is tight and local governments are reluctant to lend money,” Wang was quoted as saying. “The ministry’s financial status will be hard to improve in the near future.”

China Network Television has reported that the ministry was 1.98 trillion yuan in debt at the end of the first quarter, with an asset-liability ratio of 58.24 percent. This year, the ministry has issued bonds and commercial paper several times to alleviate its debt burden.