China still in early stage of weak recovery, economists say
Industrial earnings on the mainland accelerated in May largely owing to a low base a year ago, signalling the sector is still in an early stage of a weak recovery, economists said.
The National Bureau of Statistics said yesterday industrial firms made a profit of 470.6 billion yuan (HK$589 billion) last month, up 15.5 per cent compared to a growth of 9.3 per cent in April.
Profits for the first five months of the year rose by 12.3 per cent to 2.08 trillion yuan.
The bureau also released profit figures for last month generated from the firms' main businesses, which grew by 8.8 per cent, or 40.2 billion yuan, against the same period last year.
Driving the earnings growth were electricity production and supply, vehicle manufacturing, IT and telecommunications as well as petroleum refining and nuclear fuel production.
The four sectors contributed as much as 98.5 per cent of the total increment in the profit from the firms' main businesses.
Larry Hu, China economist with Merrill Lynch Hong Kong, said in a research note that the earnings growth pointed to a weak recovery.
"Downstream sectors are seeing their earnings continue to improve, especially for those early-cycle sectors such as cars and electronic manufacturing," said Hu. "But such positive signals have yet to be transmitted to upstream sectors, which keep losing money on falling commodity prices."
According to the official figures, foreign-invested industrial firms, including those based in Hong Kong, Macau and Taiwan, made profits of 493.4 billion yuan, up 14.7 per cent. Profits from state-owned firms rose 3.3 per cent to 576.4 billion yuan.