China’s factories increase profits for second month running after hit of state stimulus
PROFITS at Chinese factories climbed for a second consecutive month in June as the Asian giant unleashed a new wave of stimulus and the global economy started to reopen.
Manufacturers earned 666.6bn yuan (£74bn) during the month, according to the National Bureau of Statistics, 11.5pc more than in 2019 and the largest increase for more than a year.
However, analysts fear the recovery may not be sustainable. The sector is heavily reliant on state-led investment, while global and domestic demand remains weak as consumers fret over a second Covid wave. Other challenges are also weighing on the communist state. Heavy flooding has disrupted construction and other economic activity in the Yangtze Delta.
Zhu Hong, an official at the bureau, warned that the international trade situation was “complex and severe” following global condemnation of a crackdown against pro-democracy dissent in Hong Kong and China’s persecution of minority Uighur Muslims.
It came as gold hit a record price, with investors fleeing for safe-haven assets due to growing diplomatic tensions between the US and China. In Germany, meanwhile, corporate morale improved for the third month running, according to a survey by the Munich-based Ifo Institute.
Businesses’ assessment of the current situation rose in manufacturing, services, construction and trade, suggesting optimism may be gradually returning to Europe’s biggest economy.
Klaus Wohlrabe, an Ifo economist, said the institute expected the German economy to grow 6.9pc in the third quarter.
Carsten Brzeski, chief eurozone economist at ING, said the indicator suggested a rapid “V-shaped” bounceback was continuing but the pace of recovery had slowed.