Industrial firms shrug off costs and tight policies as earnings rise 32pc

PUBLISHED : Thursday, 28 April, 2011, 12:00am
UPDATED : Thursday, 28 April, 2011, 12:00am


The profits of mainland industrial firms rose 32 per cent in the first quarter compared with a year ago, suggesting businesses are weathering higher production costs and the government's tightened monetary policies.

Profits rose to 1.06 trillion yuan (HK$1.26 trillion) in the first three months of 2011, the National Bureau of Statistics said on its website yesterday.

The percentage gain marked a slight slowdown from an annual increase of 34 per cent in the first two months.

In calculating industrial profits, the statistics bureau has changed the annual sales threshold for companies eligible for inclusion to 20 million yuan from 5 million yuan since the beginning of this year. Enterprises in all 31 provinces and municipalities are covered in the monthly survey, which replaces the quarterly announcements made previously, the statistics agency.

The NBS figures also show that the combined revenues of the industrial firms increased 30.6 per cent to 17.45 trillion yuan.

Since last year, the government has launched a series measures to cool the economy and recently intensified its efforts to curb price increases after March's consumer and production inflation rates rose.

Consumer inflation jumped to a 32-month high of 5.4 per cent for the year to March, the fastest since July 2008. Producer prices also jumped at the fastest pace in 30 months, the NBS said on April 15.

Economist suggested that the latest data would add to the pressure on the government to do more to kerb prices and keep the economy on an even keel.

The latest industrial profit data confirmed that the world's fastest-growing major economy was still expanding and had been largely unhindered by government tightening measures. The People's Bank of China has raised interest rates four times and increased reserve requirements for banks six times since the third quarter of last year.

State-owned company profits were up 24.6 per cent to 364.8 billion yuan, while foreign-funded companies' profits were up 19.9 per cent to 292.4 billion yuan.

Analysts said the higher earnings at companies in sectors engaged in the production of commodities and the exploration of natural resources may help sustain investment and growth despite the government's tightening attempts.

Strong numbers

State-owned firms' profits were up 24.6 per cent to 364.8 billion yuan

Foreign-funded companies' profits were up 19.9 per cent to: 292.4b yuan