CHINA’S INDUSTRIAL PROFITS JUMP 24PC
Earnings boost due to higher commodity prices
PROFITS at China’s industrial companies rose the most in four years last month as commodities prices surged, thanks to a government-backed construction boom that is helping Beijing trim high levels of corporate debt without tripping up the economy.
The upbeat earnings report was another sweetener for authorities as China focused on stripping out financial risks from years of credit-fuelled growth and keeping the economy on a steady footing ahead of a crucial party gathering next month.
Profits last month rose 24 per cent year-on-year to 672 billion yuan (RM427.36 billion), said the National Bureau of Statistics (NBS) yesterday.
Discounting the combined JanFeb profit rise of 31.5 per cent, the latest earnings boost would be the biggest single monthly percentage rise since August 2013. The statistics bureau does not release single-month figures for January-February due to seasonal factors.
Annual profit growth was 16.5 per cent in July.
“The figures are really positive — they show China’s efforts to cut down on overcapacity is working well,” said Iris Pang, Greater China Economist at ING bank in Hong Kong.
Pang said that Beijing was also making headway in reducing debt risks.
The robust industrial earnings growth last month was driven by higher prices, particularly in sectors such as oil, steel and electronics, said NBS’ He Ping.
He estimated that surging prices contributed to nearly one third of the new profits seen last month.
A year-long, construction boom had fuelled demand and prices for building materials, while China’s push to cut excess capacity in heavy industries and its war on pollution had also appeared to intensify a short-term supply shortage and higher prices.