China’s industrial firms’ profits rise 2.6 percent in July, regaining positive
Official data on Tuesday showed that profits for China’s major industrial companies increased 2.6 percent year-on-year in July, compared to a 3.1-percent decline in June. July’s figures mark a shift from negative to positive growth.
Experts noted that the transition shows that China’s short-term economic growth is stabilizing, and the downward pressure on the economy is easing.
Private companies’ profit growth during the period was highlighted. It rose 11.4 percent yearon-year in July, 9.7 percentage points higher than that of June, according to data released by the National Bureau of Statistics (NBS) on Tuesday.
Zhu Hong, an NBS statistician, said in a statement that profits in the electrical machinery sector soared 30.8 percent, and chemical industries’ profits increased 3.2 percent after a 14.7-percent drop in June.
The profits of oil-processing industries fell 28.1 percent in July year-on-year, but the drop was 49.3 percentage points smaller than that of June, driven by gains from asset disposals and falling prices of crude oil.
The automobile manufacturing industry also contributed to the rise in July’s profit, despite a decrease of 9.2 percent, which is still 7 percentage points higher than its June figure, according to Zhu.
Profit growth for the consumer goods manufacturing sector accelerated significantly in July, with a surge of 10 percent year-on-year.
Since the second quarter, tax and fee reduction policies have been fully implemented, which have helped ease the cost pressure on enterprises, Liu Xuezhi, a senior economist at the Bank of Communications, told the Global Times on Tuesday.
A total of 1.17 trillion yuan ($164 billions) of taxes and fees were cut in the first half of the year across the country, according to China’s State Taxation Administration in July.
Zhu further noted that firms’ operations were improving in July, with inventory turnover accelerated to 17.2 days by the end of the month - 0.2 days shorter year-on-year. Enterprises’ leverages are decreasing as well, with major industrial companies’ asset-liability ratio decreasing to 56.8 percent, 0.5 percentage points lower year-on-year.
Although the profit-growth rate of industrial enterprises recorded a minor rebound in July, there is still downward pressure on the economy, Zhu said.