Industrial firms' profits slump in May
By Wang Yanlin |
June 30, 2012, Saturday
|
Print Edition
Print Edition
PROFIT of Chinese industrial companies fell by the biggest pace this year in May amid increasing concerns over the future performance of the world's second-largest economy.
Net earnings among Chinese manufacturers dropped 5.3 percent from a year earlier to 390.9 billion yuan (US$62 billion) last month, the biggest slump this year compared with the 2.2 percent decline in April, the National Bureau of Statistics said yesterday.
In the first five months, earnings fell 2.4 percent to 1.84 trillion yuan, a sharp drop from last year's increase of 25.4 percent.
"Higher production costs, a stronger yuan, as well as sluggish sales growth in both external and internal markets led to deteriorating profit among Chinese manufacturers," the bureau said in a statement.
Li Maoyu, an analyst at Changjiang Securities Co, said the worse-than-expected data indicated more stimulus measures are needed to sustain growth.
"Manufacturing remains a vital sector in China's economy although the development of the service industry is encouraged in many regions right now," Li said. "Less profit for industrial companies will dent people's confidence and drive small players elsewhere to seek better returns."
A number of private companies in east China's Zhejiang and Jiangsu provinces have been forced out of the market or are struggling on the edge of bankruptcy with less than 5 percent profit margin amid rising labor costs and a stronger yuan, according to earlier media reports.
Qu Hongbin, chief economist for China at HSBC, urged the authorities to launch a more aggressive stimulus to bolster the economy. "China has to carry out more easing policies if the government does not want to see a sharper slowdown," Qu said at the ongoing Lujiazui Forum in Shanghai.
Net earnings among Chinese manufacturers dropped 5.3 percent from a year earlier to 390.9 billion yuan (US$62 billion) last month, the biggest slump this year compared with the 2.2 percent decline in April, the National Bureau of Statistics said yesterday.
In the first five months, earnings fell 2.4 percent to 1.84 trillion yuan, a sharp drop from last year's increase of 25.4 percent.
"Higher production costs, a stronger yuan, as well as sluggish sales growth in both external and internal markets led to deteriorating profit among Chinese manufacturers," the bureau said in a statement.
Li Maoyu, an analyst at Changjiang Securities Co, said the worse-than-expected data indicated more stimulus measures are needed to sustain growth.
"Manufacturing remains a vital sector in China's economy although the development of the service industry is encouraged in many regions right now," Li said. "Less profit for industrial companies will dent people's confidence and drive small players elsewhere to seek better returns."
A number of private companies in east China's Zhejiang and Jiangsu provinces have been forced out of the market or are struggling on the edge of bankruptcy with less than 5 percent profit margin amid rising labor costs and a stronger yuan, according to earlier media reports.
Qu Hongbin, chief economist for China at HSBC, urged the authorities to launch a more aggressive stimulus to bolster the economy. "China has to carry out more easing policies if the government does not want to see a sharper slowdown," Qu said at the ongoing Lujiazui Forum in Shanghai.
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