Re­silience to be hall­mark of year 2018

China Daily European Weekly - - BUSINESS - Bloomberg contributed to this story.

Im­proved in­dus­trial prof­its in April show do­mes­tic growth re­mains ro­bust, ex­perts say

im­prov­ing profit mar­gins in sec­tors such as steel, chem­i­cal and auto, and a low com­par­i­son base in the same month of last year, He Ping, a se­nior of­fi­cial of the NBS, said in a state­ment.

In terms of sec­toral per­for­mance, prof­its in coal-min­ing and re­lated sec­tors rose by 15.5 per­cent year-onyear, while those in oil and nat­u­ral gas more than tripled. The prof­its of com­pa­nies that process oil, coal and other fuel prod­ucts rose by 19.6 per­cent year-on-year, and chem­i­cal man­u­fac­tur­ing reg­is­tered a 23 per­cent growth in prof­its.

Prof­its of non­fer­rous metal pro­cess­ing en­ter­prises dropped by 15.8 per­cent, while those in the com­puter, telecommunications and other elec­tronic equip­ment sec­tors fell by 5.3 per­cent, ac­cord­ing to the NBS.

The data sug­gest China’s in­dus­trial sec­tor re­mains on track, de­spite the coun­try’s ef­forts to curb pol­lu­tion and its re­cent trade dis­putes with the United States, and that ear­lier con­cerns about sig­nif­i­cant eco­nomic slow­down have proved to be un­founded, an­a­lysts say.

In­dus­trial out­put rose by 7 per­cent year-on-year last month, and the pro­ducer price index, which mea­sures fac­tory-gate in­fla­tion, rose by 3.4 per­cent in the same month, up by 0.3 per­cent­age point com­pared with March. How­ever, the slow­ing growth of re­tail sales and fixed-as­set in­vest­ment trig­gered con­cerns about a slow­ing econ­omy.

“The no­table re­cov­ery in in­dus­trial en­ter­prise prof­itabil­ity in April in­di­cates that China’s do­mes­tic growth re­mains re­silient,” Eva Yi, se­nior econ­o­mist at China In­ter­na­tional Cap­i­tal Corp in Hong Kong, said in a re­search note.

Guo Lei, chief macro­eco­nomics an­a­lyst of GF Se­cu­ri­ties, says, “The April profit growth, the fastest since Oc­to­ber, has shown that it is an over­re­ac­tion to be pes­simistic about the econ­omy.”

Pre­vi­ously, there were ex­pec­ta­tions of a cool­ing of the econ­omy in the sec­ond quar­ter, but the April profit data showed that such ex­pec­ta­tions are not well-founded, he says.

“Re­silience will be the most im­por­tant char­ac­ter­is­tic of the (Chi­nese) econ­omy this year,” Guo adds.

Zhao Wei, an an­a­lyst at Changjiang Se­cu­ri­ties, says that as pro­duc­tion picks up in the sec­ond quar­ter, the econ­omy may be­come more re­silient than in the first quar­ter. More­over, a pos­si­ble rise in oil prices would push up do­mes­tic pro­ducer price in­fla­tion, which, com­bined with im­prov­ing eco­nomic ac­tiv­ity, will con­tinue to raise in­dus­trial prof­itabil­ity in the sec­ond quar­ter. Con­tact the writ­ers at xinzhim­ing@chi­nadaily.com.cn

Newspapers in English

Newspapers from China

© PressReader. All rights reserved.