Pos­i­tive signs for in­dus­try emerg­ing

Prof­its see fastest rise since 2013 amid re­struc­tur­ing, though chal­lenges re­main

China Daily (USA) - - FRONT PAGE - By WANG YANFEI in Bei­jing

China’s in­dus­trial prof­its showed pos­i­tive changes in Au­gust thanks to pol­icy-level ef­forts to re­duce waste and also to a low base of com­par­i­son.

But econ­o­mists has­tened to add that un­even growth is seen across sec­tors, and the coun­try is faced with a her­culean ef­fort in struc­tural re­forms.

Data re­leased by the Na­tional Bureau of Sta­tis­tics on Tues­day show that prof­its of in­dus­trial en­ter­prises in­creased by 8.4 per­cent year-on-year from Jan­uary to Au­gust, up by 1.5 per­cent­age points com­pared with the first seven months’ year-onyear re­sults.

Growth in in­dus­trial prof­its in Au­gust in­creased by 19.5 per­cent year-on-year, which is the fastest monthly growth since Septem­ber 2013, data showed.

The im­prove­ment in in­dus­trial prof­its came from a de­crease in pro­duc­tion costs and a re­bound in prices, ac­cord­ing to the NBS. Com­par­i­son with par­tic­u­larly low fig­ures for the same pe­riod last year also boosted this year’s fig­ures, NBS said.

Zhou Jing­tong, a se­nior an­a­lyst with a think tank af­fil­i­ated with the Bank of China, noted that some pos­i­tive changes in the econ­omy sup­port the profit surge.

China’s value-added in­dus­trial out­put growth in Au­gust in­creased by 0.3 per­cent­age points com­pared with the pre­vi­ous month, and the rate of de­cline in the pro­ducer price in­dex— what pro­duc­ers re­ceive for their prod­ucts — shrank by 0.8 per­cent­age points com­pared with the pre­vi­ous month, data showed. PPI has been un­der­go­ing a pro­tracted de­cline.

The low base for com­par­i­son was the re­sult of a sharp fluc­tu­a­tion in the ex­change rate and ris­ing costs that led to the slow­est growth in three years, ac­cord­ing to Zhou.

Based on bet­ter-than-ex­pected per­for­mance, the Asia Devel­op­ment Bank has up­graded China’s an­nual GDP growth pro­jec­tion this year from 6.5 to 6.6 per­cent.

The devel­op­ment bank also raised the growth es­ti­ma­tion for next year from 6.3 to 6.4 per­cent from its pro­jec­tion in­March.

How­ever, with weak do­mes­tic and for­eign de­mand, the foun­da­tion needed to sup­port rapid, sus­tained growth in in­dus­trial prof­its has yet to sta­bi­lize, ac­cord­ing to NBS.

“There’s still a lot of work to be done to up­grade the real econ­omy,” said He Ping, a se­nior of­fi­cial with NBS.

Some sec­tors that are strug­gling to shed over­ca­pac­ity are faced by stronger head­winds, data showed.

The sub­cat­e­gory of man­u­fac­tur­ing prof­its rose 14.1 per­cent from a year ear­lier, but min­ing in­dus­try prof­its fell 70.9 per­cent, data showed.

Even though prof­its are ex­pected to con­tinue their re­cov­ery in the com­ing months, Zhou said en­ter­prises’ con­fi­dence in the re­cov­ery re­mains in the dol­drums.

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