China’s in­dus­trial firms’ prof­its rise 2.6 per­cent in July, re­gain­ing pos­i­tive

Global Times US Edition - - BIZUPDATE -

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.

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