Gift of the Chinese Magi: Companies Have No Money, Investors Have Nowhere to Invest

For a long time, as a private investment are important engine to promote China's rapid economic growth, but this year, China is facing a serious problem - the data from the public, the private fixed asset investment growth compared with last year's "cut", China's dynamic private investment is constantly weakening. China's current critical period of transition economies, countries in this task force alone is not enough, you need a lot of private capital into the real economy more effectively enter the bloodstream. Obviously, the majority of private capital holders choose to hold out, or a lot of money into the stock and property markets.

July 13, Xinhua News Agency wrote "Fire and ice, private investment how to solve?" The article quoted the company official said, the banks are only pulling loans, companies unable to invest. The article said that the area of investment liberalization and the actual operation of the "invisible barriers" exist, invested heavily in transformation and upgrading of enterprises but manufacturing and depreciation costs are too much, asset-light businesses cannot get loans, there are many policies but hard to get a strong feeling ...... They have become an obstacle to private capital, a "tiger in the road." Only remove "stumbling block" to open the door for investment.

Aside from tight credit conditions and regulatory/policy/structural stumbling blocks, there's also a depression.

"The current market environment is not good, manufacturing overcapacity more serious, willingness of private capital to invest is relatively low." Shen Jun, Chairman of Fudao Science and Technology Co., Ltd. of Wuxi, Jiangsu said about the status of investment in manufacturing.

Data show that, in Jiangsu Province, the first four months of manufacturing investment in private investment accounting for up to 85.3%. According to the National Bureau of Statistics data, the first five months of this year, private fixed asset investment growth was 3.9%. Many experts believe that the proportion of private investment accounts for nearly half of the downturn in the manufacturing sector is an important reason for the weak trend in private investment.

Survey, reporters found , a group of traditional manufacturing companies began to "prepare for winter." Asia's largest textile wholesale market in Shaoxing China Textile City has a lot of bankruptcy; a cement plant in Shaanxi with production capacity of 5000 tons per day, has as a loss of 30 million yuan this year.

Shandong Province, a private investment research report shows that private investment accounts for 90% of all manufacturing investment. Subject to market conditions, overcapacity, 358 private enterprises in the survey, 39.9 percent said financial costs compared to last year has increased, there are 37.98 percent of companies said the current willingness to invest was weak or reduce the scale investment.

New markets are seeing rapid investment though:

In some areas, new industries, new formats triggered private investment in a "blowout." Before April this year, Jiangsu Suzhou folk and smart grid networking investment grew 199.7 percent; Shandong Province of software and information technology services, financial services, research and experimental development, promotion and application of science and technology four services industry folk investment grew 45.8 percent, 37.8 percent, 58.8 percent and 26.1 percent, respectively.

Investment is hitting employment though, as private capital is going into labor saving robotics and automation:

"In 2011, after the introduction of automated production lines, directly reduce operators by 255, a line was reduced from 11 to 2-3 people." General Manager Zhang Liang Zhu told reporters.

"If winter comes the grass will turn yellow, but sooner or later will turn green. Right now adversity but also allow enterprises to feel the importance of technological innovation." Zhang Liang Zhu enterprise development confidence.

Data show that a growing number of private manufacturing enterprises have become the industrial transformation of the "main force." In the first four months, the enterprise technology investment in Jiangsu's private investment accounted for more than 80% of private enterprises in Zhejiang Province industrial technology investment accounted for 76.5% of industrial investment.

Tight credit is playing a role in other industries:

"Bank loans being called, pressure on loans, the market outlook is not good ...... companies unable to re-invest." Look helpless when Shandong Changlin Group Chairman Zhang Yihua talking about investments.

Changlin Group is one of the key technologies in hydraulic breaking the monopoly of foreign enterprises, the production of hydraulic axial piston pumps and other products has reached the international advanced level. Zhang Yihua said in recent years the company has invested more than a billion of funds for innovation, but because of the rapid decline in fixed investment, excavator market is shrinking, so that companies in trouble. In view of this, bank loans are only being pulled, so that it's becoming increasingly difficult for companies.

Companies light on assets find it difficult to obtain credit (this is why "solutions" such as copper financing exist).

Lin Dong Sheng, chairman of Hangzhou Green Group has developed together with several partners tidal current energy generation technology, but the company does not sell the bank refused the loan income, so that this "world first", "little giant" nearly died infant. "Asset-light company how to live a mortgage difficulties?" Lin Dongxi hope to have specialized agencies in the field of high-tech enterprises in long-term low-interest loans.

The clearest sign that something is amiss in the market is the next anecdote. Many private companies have no money to invest, and many investors have no where to invest, aka a depression:

For many private enterprises, "investment money" and "no place to invest" is the most difficult issues. Jiangsu provincial government official said, the private enterprises to invest in vital confidence and stability. We are taking steps to find private investment's "pain points," one by one "put things in place" to help companies get over this hump.

iFeng: 官媒发声民间投资棋局该如何解：扫除“拦路虎”！