Slow pace in profit growth of SOEs
Print Edition
PROFIT growth of China’s state-owned enterprises slowed in the first nine months of 2014, adding to signs of fragility in the world’s second-largest economy as factories struggle to cope with falling prices and sluggish demand.
Non-financial SOEs made combined profits of 1.85 trillion yuan (US$302 billion) between January and September, up 5.9 percent from the same period of last year, the Ministry of Finance said yesterday.
That slowed from a year-on-year rise of 8 percent in profits in the January-August period. The increase was also below the 10.5 percent rise seen in January-September 2013.
Data this week showed China’s economy grew 7.3 percent year on year in the third quarter — the weakest pace since the depths of the global financial crisis. The growth also slowed down from 7.5 percent in the second quarter.
Meanwhile, China’s Producer Price Index fell 1.8 percent in September from a year earlier, its 31st consecutive monthly decline, highlighting increasing strains on companies.
Profits of firms owned by the central government rose an annual 7.1 percent in the first nine months while companies owned by local governments reported a 2.6 percent rise in profits.
Companies in automobile and machinery industries enjoyed faster profit growth in the first nine months, but firms in the nonferrous metal sector remained in the red.
The ministry added that the total assets of state companies rose 11.8 percent to 99.2 trillion yuan at the end of September, while total liabilities climbed 12 percent to 64.6 trillion yuan.
Chinese state firms are often criticized for being inefficient and not turning over more of their profits to the nation despite being generously subsidized by the state.
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