Industrial firms’ profit growth fastest in 6 months
Print Edition
PROFITS earned by Chinese industrial firms in April rose at their fastest pace in six months, data from the National Bureau of Statistics showed yesterday, as factories benefited from higher prices and strong demand.
Profits in April rose 21.9 percent year on year to 576 billion yuan (US$90.1 billion), the quickest since October, bringing gains for the first four months of 2018 to 15 percent. The growth was bigger than the 11.6 percent increase registered for the first quarter.
The data suggests China’s industrial sector is still seeing solid growth momentum despite curbs on pollution and rocky trade relations with the United States.
Last month’s rebound was helped by lower comparison figures for April 2017, higher factory prices and stronger demand, He Ping, head of the bureau’s industrial division, said in a statement.
It was a significant improvement over March’s 3.1 percent growth that was the slowest in over a year and which government officials had blamed on the timing of the Lunar New Year holiday.
The higher April data should help ease concerns of slowing momentum in China’s economy as the country implements tougher pollution controls on “smokestack” industries and cash-strapped regional governments cut back on big investment projects, curbing demand for building materials.
He said yesterday’s data revealed the gradual effects of supply-side structural reform, and the improving operation quality and profitability at industrial enterprises.
The companies’ debt-to-asset ratio dipped 0.7 percentage points from one year earlier to 56.5 percent at the end of last month. Liabilities of industrial firms rose 6.1 percent year on year as of end-April, according to the statistics bureau.
A Reuters analysis showed that debt growth for Chinese companies has slowed to the lowest rate in more than a decade, but companies have also seen profit margins squeezed to their lowest level in two years.
China continues to call for tighter controls on risky investments and speculation in the property sector, but does not want to cut off funding to companies in the “real economy” such as manufacturing firms that are a key source of jobs.
April’s rebound was led by the steel, chemicals and automobile industries, said He, as profits for iron and steel processing firms rose 260 percent in April.
No industrial sectors recorded year-on-year losses over January to April, the data showed.
But earnings in the computer and telecommunications sector fell 5.3 percent over the four months, though that was a slight improvement from an 11 percent decline in the first quarter.
Profits at state-owned firms rose 26.2 percent to 627 billion yuan for the January-April period, compared with a 23.1 percent rise in the first quarter.
The data includes companies with annual revenues of more than 20 million yuan from their main operations.
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