Abstract: When entering the L-type adjustment, Chinese economy has formed an anomaly of the co-existence of slowing down and fluctuation. From the perspective of enterprise operational leverage, this paper tries to explain the micro mechanism behind the co-existence of slowing down and fluctuation based on the panel threshold model of A share industrial enterprises. The findings show that along with the expansion of production capacity, the enterprise operating leverage will take on nonlinear evolution characteristics from negative to positive. Compared with the non-excess industries, the operational leverage of the industries with excess production capacity is higher; the fluctuation is more obvious under the same demand shock. The contraction of production capacity due to insufficient demand in the period of economic recession drives the operating leverage to advance gradually into infinity, which amplifies the impact of demand fluctuation on the profit and results in the increase of the fluctuation range at the macro level instead of decrease.

Key words: operating leverage; L-shape adjustment; stability; excess production capacity