China’s in­dus­trial prof­its get boost from high prices, sales

Struc­ture of growth not ideal: NBS of­fi­cial

Kuwait Times - - BUSINESS -

Profit growth in China’s in­dus­trial sec­tor picked up in Oc­to­ber, aided by stronger sales and higher prices, sug­gest­ing fur­ther strength­en­ing of the world’s sec­ond­largest econ­omy, though growth was skewed to­wards high-pol­lut­ing heavy in­dus­try. There has been wide­spread spec­u­la­tion in China’s com­modi­ties fu­tures mar­ket this year, with coal prices hit­ting records in re­cent weeks, and econ­o­mists say growth driven by loose money poli­cies won’t last.

In­deed, a sub­dued prop­erty mar­ket is ex­pected to drag on growth in the first two quar­ters next year, as pol­i­cy­mak­ers in­tro­duce curbs to cool home prices, which could hit prof­its of com­pa­nies pro­duc­ing con­struc­tion ma­te­ri­als.

Prof­its in Oc­to­ber rose 9.8 per­cent to 616.1 bil­lion yuan ($89.1 bil­lion), the Na­tional Bu­reau of Sta­tis­tics (NBS) said in a state­ment yes­ter­day. Prof­its in Septem­ber rose 7.7 per­cent.

In­dus­trial prof­its rose 8.6 per­cent in the first 10 months from the same pe­riod a year ear­lier, sim­i­lar to an 8.4 per­cent growth rate in the first nine months of the year. Prof­its in the coal min­ing sec­tor rose 112.9 per­cent for Jan­uaryOc­to­ber from the same pe­riod a year ear­lier while man­u­fac­tur­ing prof­its rose 13.2 per­cent. “Although Oc­to­ber in­dus­trial profit growth picked up, the struc­ture of growth was not ideal,” NBS of­fi­cial He Ping said in a state­ment ac­com­pa­ny­ing the data.

“Prof­its in tra­di­tional raw ma­te­rial pro­duc­tion in­creased rel­a­tively quickly...while high tech­nol­ogy and equip­ment man­u­fac­tur­ing profit growth slowed,” He said.

Profit growth was overly re­liant on ris­ing prices, and in­dus­trial firms need or­ganic im­prove­ment to see bet­ter re­sults, He added. Prof­its for iron and steel pro­duc­tion and pro­cess­ing com­pa­nies rose 310.2 per­cent in Jan­uaryOc­to­ber.

China’s pro­ducer prices jumped more than ex­pected in Oc­to­ber as prices of coal and other raw ma­te­ri­als surged in the midst of a sup­ply crunch and a pick-up in the econ­omy. The pro­ducer price in­dex is also ex­pected to stay pos­i­tive in com­ing months.

Chi­nese in­dus­trial firms’ li­a­bil­i­ties at the end of Oc­to­ber were 5.1 per­cent higher than at the same point last year and rose slower than as­sets. The data cov­ers large en­ter­prises with an­nual rev­enues of more than 20 mil­lion yuan from their main op­er­a­tions.

Prof­its at state firms rose 0.4 per­cent in the first 10 months of 2016 from a year ear­lier, mark­ing the first in­crease in year-to-date earn­ings for state-owned com­pa­nies this year, the fi­nance min­istry said on Fri­day. China’s in­dus­trial prof­its have re­bounded strongly this year af­ter falling last year, boosted by a re­cov­ery in com­modi­ties prices as sup­ply tight­ened due to a ca­pac­ity re­duc­tion drive and an in­fra­struc­ture boom. — Reuters

BEI­JING: This file photo taken on Septem­ber 11, 2015 shows a Chi­nese flag fly­ing near apart­ment build­ings in Bei­jing. Chi­nese house­hold debt has risen at an “alarm­ing” pace as prop­erty val­ues have soared, an­a­lysts say, rais­ing the risk that a real es­tate down­turn could send shock­waves through the world’s sec­ond largest econ­omy. — AFP

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