A Baosteel plant in Shanghai. (File photo/Xinhua)
The financial health of Chinese industries is getting worse, with the situation being particular alarming in the machinery, coal and steel sectors, a report by the Chinese Ministry of Industry and Information Technology said Wednesday.
According to the report, large sums of money are owed by clients to the machinery industry, given slowing external demand.
Money owed between January and February to machinery makers totaled 2.2 trillion yuan (US$346.6 billion), but grew to 2.49 trillion yuan (US$392 billion) in June.
That represented a 17.29% increase from last year, higher than the revenue growth rate of 9.44%.
Significantly, manufacturers of heavy machinery and engineering machinery are finding it difficult to get paid by their clients. In one case, a machinery manufacturer had supplied equipment for a major government project and was still waiting to be paid.
Circumstances in the coal industry are not optimistic either. Costs for major producers rose 31% in the first half of this year compared to same period of last year. By the end of July, 194.8 billion yuan (US$30.6 billion) was owed to 90 major coal miners by their clients, an increase of 48.7% from last year.
Accounts receivable in the steel industry amounted to 116 billion yuan (US$18.2 billion) by the end of June, up 20% from last year.
An industry source told Xinhua's Economic Information Daily that if the economy remains weak and the credit supply continued to be constrained, it could take longer for steel firms to retrieve the money owed to them.
While the nonferrous metals industry and makers of power generators have also reported difficulty in recovering payments, the situation is still under control in these sectors.
The Ministry of Industry and Information Technology, the China Banking Regulatory Commission, the Ministry of Commerce, the National Development and Reform Commission, the Ministry of Housing and Urban-Rural Development, the State-owned Assets Supervision and Administration Commission and the People's Bank of China have been asked by the State Council to research the problem and draft appropriate responses.