Profit climbs at slower pace
By Wang Yanlin |
June 28, 2011, Tuesday
|
Print Edition
Print Edition
INDUSTRIAL companies are witnessing further moderation in profit growth due to China's easing economic growth and high production costs.
Analysts said the moderation may continue as tightening policies will remain in place to curb inflation.
Net earnings among manufacturers expanded 27.9 percent from a year earlier to 1.92 trillion yuan (US$296.3 billion) in the first five months of this year, the National Bureau of Statistics said yesterday. The pace slowed from 29.7 percent in the January-April period and 32 percent in the first quarter.
Profit growth has been weakening since the start of this year.
"Higher prices of raw materials, less market liquidity and decreasing demand at home and abroad all eat into industrial profit," said Li Maoyu, an analyst at Changjiang Securities Co.
The Producer Price Index, the factory-gate gauge of inflation, climbed 6.8 percent year on year in May, the same pace as in April. It was fueled by rising prices of oil, coal and cotton, and helped push up consumer inflation to a 34-month high of 5.5 percent.
To tame price rises, the central bank has raised interest rates four times since October.
Meanwhile, China's tightening monetary policy stance has slowed lending by commercial banks. New yuan loans in China totaled 3.6 trillion yuan in the first five months, down 12 percent from a year earlier.
Li Yining, a renowned economist and a member of the National Committee of the Chinese People's Political Consultative Conference, said over the weekend that tightening measures are increasing the risk of bankruptcy for smaller companies and raising the specter of unemployment.
Li said current money supply has returned to a normal level and the country should not roll out more tightening measures.
Against this backdrop, manufacturing activities were getting closer to stagnation, a preliminary reading of 50.1 for the HSBC Purchasing Managers' Index showed last week. Globally, the United States reported lower than expected economic results for the first quarter, and the European Union was tangled in a debt crisis. Thus, overseas demand is unlikely to have a big rebound any time soon, analysts agreed.
Analysts said the moderation may continue as tightening policies will remain in place to curb inflation.
Net earnings among manufacturers expanded 27.9 percent from a year earlier to 1.92 trillion yuan (US$296.3 billion) in the first five months of this year, the National Bureau of Statistics said yesterday. The pace slowed from 29.7 percent in the January-April period and 32 percent in the first quarter.
Profit growth has been weakening since the start of this year.
"Higher prices of raw materials, less market liquidity and decreasing demand at home and abroad all eat into industrial profit," said Li Maoyu, an analyst at Changjiang Securities Co.
The Producer Price Index, the factory-gate gauge of inflation, climbed 6.8 percent year on year in May, the same pace as in April. It was fueled by rising prices of oil, coal and cotton, and helped push up consumer inflation to a 34-month high of 5.5 percent.
To tame price rises, the central bank has raised interest rates four times since October.
Meanwhile, China's tightening monetary policy stance has slowed lending by commercial banks. New yuan loans in China totaled 3.6 trillion yuan in the first five months, down 12 percent from a year earlier.
Li Yining, a renowned economist and a member of the National Committee of the Chinese People's Political Consultative Conference, said over the weekend that tightening measures are increasing the risk of bankruptcy for smaller companies and raising the specter of unemployment.
Li said current money supply has returned to a normal level and the country should not roll out more tightening measures.
Against this backdrop, manufacturing activities were getting closer to stagnation, a preliminary reading of 50.1 for the HSBC Purchasing Managers' Index showed last week. Globally, the United States reported lower than expected economic results for the first quarter, and the European Union was tangled in a debt crisis. Thus, overseas demand is unlikely to have a big rebound any time soon, analysts agreed.
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