Core Viewpoint - The article highlights signs of economic stabilization in China, particularly in the industrial sector, with a notable improvement in manufacturing profits despite a year-on-year decline in overall industrial profits [1][2]. Group 1: Economic Indicators - In the first half of the year, profits of large industrial enterprises decreased by 1.8% year-on-year, while June saw a 4.3% decline, which is a 4.8 percentage point narrowing from May [1]. - Manufacturing profits shifted from a 4.1% decline in May to a 1.4% increase in June, indicating a significant marginal improvement [1]. - The revenue of large industrial enterprises grew by 2.5% year-on-year, but operating costs increased by 2.8%, leading to a decrease in profit margins [2]. Group 2: Financial and Fiscal Support - There is a need for enhanced financial support for real enterprises, with a focus on medium to long-term funding to prevent intermittent cash flow shocks [2][3]. - Fiscal measures should include increasing the frequency of tax refunds to alleviate the cash flow pressures faced by enterprises, particularly in light of rising accounts receivable and inventory levels [3]. - A structural tax reform is necessary to shift from indirect to direct taxes, which could help mitigate liquidity constraints on businesses [3]. Group 3: Market Dynamics and Competition - The core issue facing enterprises is insufficient effective demand, necessitating a direct change in the demand elasticity of various products and services [4]. - Promoting market competition and allowing inefficient capacities to exit the market is essential for enhancing the risk-bearing capacity of industries and stimulating potential market demand [4]. - The government should prepare for the elimination of outdated capacities by providing a supportive legal and institutional environment for bankruptcy and restructuring processes [5].