Profits rebound the latest sign nation’s economy is stabilizing
Print Edition
Profit growth of China’s industrial companies rebounded in July, the latest sign that the world’s second-largest economy is stabilizing as demand at home and abroad recovers.
Industrial profits growth accelerated to 11.6 percent on annualized terms last month, compared with the pace of 6.3 percent in June, the National Bureau of Statistics said yesterday.
The profits totalled 419.5 billion yuan (US$67.9 billion) in July, helping to accumulate the amount to 3 trillion yuan in the first seven months, which was up 11.1 percent from a year earlier.
He Ping, a bureau researcher, said July’s profit rebound was led by stronger performance in the power generation, information technology, oil refinery and automobile sectors.
“These four industries contributed the most,” He said. “China’s industrial profits were still created by the minority, while most manufacturing companies need to raise their profit-making capabilities.”
Zhu Haibin, chief economist at JP Morgan, said it was another piece of good news.
“China’s economic performance is stabilizing as supportive policies filter through,” Zhu said.
But he cautioned that China’s manufacturing companies should stage more balanced growth.
The statistics bureau said that power companies more than doubled their aggregate profits to 33 billion yuan in July, while car manufacturers posted 26.8 billion yuan in profits, up 16 percent year on year because of brisk sales.
The bureau’s data also showed profits coming from manufacturers’ core businesses grew 1.8 percent from a year earlier, down 2.3 percentage points from June.
The figures are based on a survey of companies with annual sales of 20 million yuan or more.
Bureau spokesman Sheng Laiyun said on Monday that China was sustaining positive growth momentum in the second half and that the country would meet its growth target of 7.5 percent for this year.
China’s economy was stuck in a weak recovery in the first half, with the growth rate easing to 7.5 percent in the second quarter from 7.7 percent in the first three months.
Supportive measures, including tax reductions for small companies, more investment in infrastructure construction and less red tape for exporters, have been adopted to strike the balance between short-term growth stability and medium-term risk mitigation.
In the past two months, there were already signs of stronger performance: data of trade, industrial production, fixed-asset investment and retail sales in July were better than expected.
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