China’s fac­to­ries in­crease prof­its for se­cond month run­ning af­ter hit of state stim­u­lus

The Daily Telegraph - Business - - Business - By Lizzy Bur­den

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.

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