The light industry is a comprehensive industry with a higher level of market-orientedness, and all its sectors boast product exports on different scales. Due to the global financial crisis breaking out in 2008, consumer confidence declined while consumer markets were shrinking across the world. The light industry had been faced with unprecedented difficulties, and those sectors which were dependent on export and whose raw materials were primarily from foreign resources were suffering significant impacts. The light industry had followed a course from high to low in 2008, especially in the fourth quarter. All sectors in the industry had gone through difficulties of different degrees in operations and witnessed declining profits. Some enterprises were suffering heavy losses.
In 2008, the light industry had maintained high growth rate in its cumulative industrial output value and profits thanks to the rapid growth in the first half of 2008. During the first half of 2008, the growth rates of the cumulative industrial output value and profits stood at 29.14% and 36.66% respectively during the first half of 2008, hitting a record high in three years and offering important support for the light industry to achieve relatively higher growth speed in the whole year.
In 2008, the light industry witnessed a declining curve in its total industrial output value and added value. The growth of total industrial output value stood at 25.6%, 25.0%, 23.4% and 21.0% respectively in the four quarters, while the growth of industrial added value were 14.7%, 13.8%, 13.1% and 12.3% respectively.
Figure 4 4 Growth of the light industry’s output value in 2008
Source of the data: China National Light Industry Council
4.1.1 Development of Sub-industries
In 2008, 17 out of the 18 sub-industries witnessed double-digit growth in industrial output value, and 10 of them had maintain the growth rate of over 20%. The industry of wood, bamboo, cane, palm fibre and straw product witnessed the highest growth speed of 36.89%, followed by the glass and ceramics industry (27.53%). The industries of clock, spectacle and other machinery manufacturing for cultural and office uses saw the lowest growth rate of 7.7%, following the industries of stationery and sports products and printing (10.78%) as well as the industry of bicycle manufacturing (12.82%). All sectors in the light industry had achieved sound performance in 2008, but problems emerged in the later half year, the fourth quarter in particular. Shrinking market demands led to excessive inventory. It was hard for enterprises to put the high-priced raw materials they purchased during the early stage into use withn a short term. Slowing-down turnover of capital and default in the payment resulted in difficulties in collecting payment and current capital problems. Those large-sized enterprises in the papermaking industry and household appliance industry were faced with the risk of capital chain rupture for a time.
The agricultural and sideline food processing industry achieved a total output value of 2330.5 billion yuan in 2008, accounting for 24.82% of the whole light industry and ranking first among all light-industry sectors. The battery, household electric and lighting device manufacturing industry (12.52%), the plastic manufacturing industry (10.26%), the food manufacturing industry (8.27%) and the papermaking and paper product industry (8.16%) followed.
Figure 4 5 Analysis of the Light Industry's Total Production Values by Sector in 2007-08
As a barometer of for industrial economy, producer's price index (PPI) for manufactured products indicates variation tendency and fluctuations of the prices of manufactured products. It is one of the important indicators for national economic accounting and economic management. Its fluctuation is the comprehensive reflection of the operation outcomes of the industrial economy, and also one of the factors impacting the operation of the industrial economy. In 2008, prices of light-industry products followed a course from high to low, and the price index witnessed accelerated decreases in the later half year. Producer's price index for the light-industry products with agricultural products as raw materials saw drastic fluctuations than that of the light-industry products with non-agricultural products as raw materials. Producer's price index for the light-industry products with agricultural products as raw materials reached up to 107.32 points in April, 2008, hitting a record high, and then had declined for seven consecutive months to 101.25 points in December. Producer's price index for the light-industry products with non-agricultural products as raw materials witnessed slow fluctuations, undergoing gradual increases from January to August in 2008 and hitting a maximum of 103.73 points in September. Afterwards, the index declined rapidly to 100.54 points in December. The light industry’s price indexes saw insignificant changes from March to September and accelerated declines from October to December.
Figure 4 6 Price Indexes of the Light Industry in 2008
The total import volume of the light industry reached up to US $79,990.67 million in 2008, US $69145.78 million more than that of 2007. The export volume stood at US $309229.06 million, US $270117.08 million more than that of 2007. In January, 2008, the total import volume of the light industry reached up to US $6359.877 million, a year-on-year increase of 27.23%, and the export volume reached US $25469.929 million, a year-on-year increase of 23.14%. In February, the import saw a faster year-on-year growth than the export. The year-on-year growth of import had maintained at about 25% from January to June, while the year-on-year growth of export at about 15%. The light industry witnessed significant declines in year-on-year growth of import and export due to the global financial crisis in the later half year. The year-on-year growth of import stood at only 15.68% in December, hitting a minimum in the year, while the year-on-year growth of export was 15.68%, showing a declining trend.
Figure 4 7 Import and Export Volume of the Light Industry in 2008
Proportion of the trade surplus of China's light industry declined rapidly in 2008. The cumulative trade surplus of the light industry from January to December of 2008 reached up to US $229.24 billion, a year-on-year increase of 14.05%. The growth was 4.55 percentage points lower than that of 2007. The proportion of the trade surplus of China's light industry in China’s total trade surplus had declined from the 104.37% of the first half year, the 92.15% of the first three quarters to the 77.59％ of the whole year.