Profit growth slows in ma­jor in­dus­tries

Sup­ply-side struc­tural re­forms work­ing, of­fi­cial says; debt lev­els down slightly

China Daily (Latin America Weekly) - - 4 China - By XIN ZHIMING xinzhim­ing@chi­

China’s ma­jor in­dus­tries reg­is­tered slower profit growth in July, but a se­nior of­fi­cial at the Na­tional Bureau of Statis­tics said on Sunday that over­all data show the coun­try’s sup­ply-side struc­tural re­form has con­tin­ued to make progress.

Prof­its of the coun­try’s ma­jor in­dus­trial com­pa­nies last month rose by 16.5 per­cent from a year ear­lier, the bureau said on Sunday. The fig­ure was 2.6 per­cent­age points lower than in June, but still sig­nif­i­cantly on the plus side.

In the first seven months as a whole, prof­its of ma­jor in­dus­trial en­ter­prises rose 21.2 per­cent year-on-year, com­pared with 22 per­cent in the first half of this year, the bureau said.

The data cover com­pa­nies with an­nual rev­enues of more than 20 mil­lion yuan from their pri­mary op­er­a­tions.

The cool­ing of profit growth was mainly the re­sult of sea­sonal fac­tors, such as ex­treme weather con­di­tions, the bureau said on its web­site.

“Short-term noneco­nomic fac­tors, such as va­ca­tions and dis­rupted pro­duc­tion caused by ex­treme high tem­per­a­tures, have led to slower growth of prof­its,” it said.

The fig­ure should not be in­ter­preted as a sign of a weak­en­ing of the Chi­nese econ­omy since, apart from ex­treme weather, it is mainly re­lated to the rel­a­tively high base fig­ures of last year, ac­cord­ing to a re­search note by CITIC Se­cu­ri­ties. China’s eco­nomic fun­da­men­tals re­main solid, and both its do­mes­tic and ex­ter­nal de­mands are ris­ing, which will bol­ster growth in the com­ing months, it said.

The man­u­fac­tur­ing sec­tor, which ac­counts for 88 per­cent of in­dus­trial prof­its, saw profit growth of 18.1 per­cent in the first seven months, slightly down from 18.5 per­cent in the first half. But min­ing in­dus­tries reg­is­tered prof­its that were 7.9 times those of a year ago be­cause of price in­creases in re­cent months.

Ma­jor State-owned in­dus­trial en­ter­prises recorded profit growth of 44.2 per­cent in the first seven months, while that of pri­vate com­pa­nies was 14.2 per­cent, the bureau said.

On the whole, as the sup­ply-side struc­tural re­form con­tin­ues, over­all cor­po­rate earn­ings are im­prov­ing, the state­ment said.

China has made ef­forts to push for­ward its sup­ply-side struc­tural re­form to shrink ex­ces­sive pro­duc­tion ca­pac­ity, cut cor­po­rate debt and re­duce costs for en­ter­prises, among other things.

He Ping, a se­nior of­fi­cial at the NBS, said the July data show that China has con­tin­ued to make head­way in those ar­eas. In July, for ex­am­ple, the as­set-to-li­a­bil­ity ra­tio of ma­jor in­dus­trial en­ter­prises, which re­flects debt lev­els, was 55.8 per­cent, down by 0.7 per­cent­age points year-on-year, He said, adding that the profit-to-rev­enue ra­tio of those en­ter­prises’ core busi­nesses was 5.97 per­cent, 0.33 per­cent­age points higher than a year ago.

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