How does manufacturing innovate in structural adjustment and transformation?

In February 2016, the China Manufacturing Purchasing Managers Index (PMI) was 49.0%, down 0.4 percentage points from the previous month, setting a new low since November 2011, and at a level below the critical point for seven consecutive months.
Obviously, this is an important sign that the manufacturing industry is sluggish and the manufacturing industry is still in a down state. What is even more worrying is that the PMI sub-indicators seem to be more severe than the comprehensive indicators, and the downward pressure is also greater, and the contradictions are more prominent. First of all, from the supply side, both the production index and the raw material inventory index and the supplier delivery time index are not very reassuring. As far as the production index is concerned, the index is below the critical point, and most of the sub-indices are below the critical point, while the production index has remained above the critical point. In particular, in February, after falling by 1.2 percentage points, the result still reached 50.2%, which was above the critical point. It can be seen that the production pressure and momentum brought about by overcapacity are strong. The immediate consequence is that even if the market demand is insufficient, production will not stop. This also explains from one aspect that the task of supply-side structural reform is quite arduous, and it is quite urgent to improve the quality and efficiency of supply.
From the raw material inventory index and the supplier delivery time index, the two are 48.0% and 49.8%, respectively, both below the critical point. That is to say, the demand for raw materials on the supply side and the requirements for the delivery time of suppliers are all in a serious shortage and slack state, and there is no effective connection with the market. The contradiction between supply and demand in the market is still outstanding, and the demand does not support the supply. Nor has it been able to drive demand. More and more contradictions point to the supply side. How to accelerate the structural reform of the supply side and increase the effective supply must become the top priority of the current and future economic work.
From the demand side, the new order index, which is one of the main indicators to measure market demand, business operation and coordination of supply and demand, was 48.6% in February, down 0.9 percentage points from the previous month. Two months below the critical point level. This means that market demand is still in a downturn, and production materials and living materials have not been able to effectively boost the new order index.
The measurement of the demand side, also an important indicator of the supply side capacity and level - the employee index, continued to be in the contraction interval in February, was 47.6%, down 0.2 percentage points from the previous month. Further explanation, because the situation of the demand side has not changed significantly, and it shows signs of continued deterioration, eventually the supply side cannot form an absorption capacity for employment. This also means that a series of measures to stabilize growth and promote development are still on the eve of exertion and have not formed effective effects and efficiency.
On February 29th, the central bank once again launched a policy of reducing the deposit reserve ratio. From another perspective, the implementation of policy stimulus for stable growth, whether it can produce effective stimulation and boosting effect, is also a problem worthy of attention. And this RRR is more likely to have an effect, probably the real estate market and the stock market. In particular, the real estate market will greatly boost housing prices due to the further relaxation of monetary policy, and may trigger a new housing price bubble. On the contrary, whether the real economy can be stimulated like the real estate market, whether the manufacturing industry will form an interactive effect due to the introduction of the RRR cut is worthy of attention. The impact of RRR cuts on the stock market may also depend mainly on real estate, steel, cement and other industries that have been in a downturn for some time.
The current manufacturing industry is still lying on the floor. When it can stand up from the floor, it will directly affect the process of economic stabilization and economic recovery. The supply-side structural reform is the most important means for the manufacturing industry to stand up quickly from the floor. If the supply-side structural reform can make breakthroughs in a relatively short period of time, it is obviously not possible to rely excessively on monetary policy. It should also be supplemented by more fiscal policies and social security policies, from all angles and fields. Each link provides support for structural reforms on the supply side and forms a combined force for reform. In particular, the fiscal policy must go all out, such as fiscal transfer payments, tax sharing, financial subsidies, etc., all must be exerted, and the supply-side structural reform must be supported with the utmost strength. Otherwise, it will be difficult to make a breakthrough.
Once the supply-side structural reforms are in place, the manufacturing industry will naturally stand up from the floor. When the manufacturing industry stands up from the floor, and then make full use of the policy, the manufacturing industry will continue to improve in terms of structural adjustment and transformation, quality improvement, technological innovation, brand cultivation, and enhancement of core competitiveness. China’s economic base is increasingly Solid and more and more solid.