Industries in Shanxi suffer from high debt burden

Source:Global Times Published: 2013-8-15 23:43:01

Industrial producers in North China's Shanxi Province ­suffered from rising debt ratio in the first half of this year, as the province's pillar coal ­industry remains sluggish,, a news portal under China News Service, ­reported Thursday.

Average debt-asset ratio of industrial manufactures in the province rose to 70.7 percent in June, data from the statistical information bureau of Shanxi Province showed. The average debt-asset ratio has hovered around the 70 percent mark throughout the first half, according to the report.

While 30 percent is generally considered as the normal level, 70 percent is seen as the alarming line.

The major reason behind the increasing debt level is that both the demand and price of coal have been torpid in the first half of this year. The coal industry accounted for over 40 percent of the province's industrial revenue in the first half.

Thermal coal prices have dropped by over 12 percent to around 550 yuan per ton since the beginning of this year, due to weak coal demand amid the overall economic slowdown.

In the first half, coal companies in the province reported 6.91 billion yuan ($1.13 billion) of profits, down 64.94 percent from the previous year, local official statistics showed.

Given the downturn in its major industry, the province's fiscal revenue growth also slowed in the first half, rising 5.5 percent year-on-year to 157.2 billion yuan, compared with a 19.75 percent year-on-year growth in the first half of 2012.

Northwest China's Shaanxi Province and North China's ­Inner Mongolia Autonomous Region, two major coal producers, also reported slower fiscal revenue growth in the first half, as coal mines cut or halted production in the first half.

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