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October 29, 2009

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Industrial profit slows decline

CHINA'S industrial companies saw their profit decline at a slower pace in the first three quarters as the manufacturing sector improved after the country's gross domestic product rebounded.

The net earnings of the Chinese manufacturers shrank 9.1 percent from a year earlier to 1.55 trillion yuan (US$227 billion) in the January-September period. The drop slowed from a loss of 10.6 percent in the first eight months, the National Bureau of Statistics said yesterday.

Out of the 39 industries surveyed, 35 said their profit improved. Transport equipment producers saw their earnings rise 21.5 percent year on year in the first three quarters, ranking No. 1 in terms of profit growth.

"China's improving macroeconomic conditions pave the way for a recovery in the country's manufacturing sector," said Li Maoyu, an analyst at Changjiang Securities Co.

Thanks to resilient domestic demand boosted by the government's stimulus package, industrial production in the first nine months jumped 8.7 percent annually and helped to counter the impact of the global economic crisis.

Exports, the sector hardest hit by the global financial crisis, also showed signs of recovery last month. In September, China's overseas shipments fell 15.2 percent from a year ago to US$115.9 billion, the smallest drop so far this year. It beat the consensus forecast for a 21 percent fall and moderated from August's decline of 23.4 percent.

But industries such as oil refinery, steel, non-ferrous metal and paper-making still saw heavy losses in the first three quarters and such losses mirror the problem of overcapacity in these industries, said Li.

Wu Jinglian, an economist at the Development Research Center under the State Council, urged recently that China should reform its growth model, saying that fundamental changes can guarantee sustainable job creation and lift consumption.


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