China to Shut 1,000 Manufacturing Firms by 2020

Beijing will shut 1,000 manufacturing companies by 2020 under a years-long plan to restructure its economy, the official Xinhua news agency reported on Saturday, citing a city official.

The closures are part of a bigger initiative to balance and integrate the economies of the cities of Beijing, Tianjin and the surrounding Hebei province. The plan will also involve the construction of Xiongan, a new development in Hebei, Reuters reported.

By the end of the decade, Beijing will also close 300 markets and logistics centers, Liu Bozheng, deputy director of the Beijing office overseeing the integration of the Beijing-Tianjin-Hebei region, said at a press conference.

Beijing, home to 22 million people, is trying to curb population growth and relocate industries and what it calls “non-capital functions” to Hebei to curb pollution and ease congestion.

This year, Beijing will close 500 manufacturing companies and 176 markets and logistics centers, and relocate several universities and hospitals to suburban areas, Liu said.

Beijing plans to spend 12.2 billion yuan ($1.9 billion) in moving non-capital functions, according to a 2018 draft budget report.

Meanwhile, profits for China’s industrial firms rose at the slowest pace in a year in December as Beijing’s anti-smog curbs hit activity, but profits clocked their fastest annual rise in six years as cost cutting and a construction boom helped businesses in 2017.

For the full year, profits surged 21% to 7.519 trillion yuan, the fastest pace since the 25.4% expansion in 2011, and accelerating from 2016’s 8.5% increase, data from the National Bureau of Statistics showed Friday.

The fast growth in 2017 profits is largely due to the deepening of cuts in over-capacity and costs reduction efforts, He Ping of the statistics bureau said in a statement along with the data release.

While China’s efforts to reduce pollution and credit risks in the economy have hit segments of industry, analysts expect businesses will manage a transition to new requirements for cleaner production and leaner operations without taking major blows to their profits.

Profits in December rose 10.8% from a year ago to 824.16 billion yuan, their weakest expansion in 12 months, and slowing from November’s 14.9% gain. China’s producer prices rose at their slowest pace in 13 months in December, as the government’s war against winter smog dented factory demand for raw materials.