China industrial companies' profit gains surge in October
Bloomberg in Beijing
Chinese industrial companies’ profit gains surged in October and turned positive for the year as factory output accelerated and export growth picked up following a seven-quarter economic slowdown.
Net income gained 20.5 per cent from a year earlier to 500.1 billion yuan (around HK$625.5 billion), the National Bureau of Statistics said on Tuesday in Beijing. Profits in September rose 7.8 per cent, the first gain in six months.
The data build on signs of a growth recovery in the world’s second-biggest economy, with industrial production and overseas shipments both rising last month by the most since May. The gains reduce the impetus for the new Communist Party leadership headed by Xi Jinping and Li Keqiang to build on policy stimulus including interest-rate cuts in June and July.
“The improved industrial profitability further confirms that the Chinese economy is stabilising and gaining growth momentum,” said Ding Shuang, senior economist for China at Citigroup in Hong Kong, who previously worked at the country’s central bank. “The profit number, together with other economic indicators, shows there is no need for the government to launch new easing policies.”
Citigroup raised its 2013 GDP growth forecast for China to 7.8 per cent from a previous estimate of 7.6 per cent, according to a research report yesterday.
Most large- and medium-sized Chinese steel mills reversed losses in October, the official Xinhua News Agency reported on November 25, citing Liu Zhenjiang, vice president of the China Iron & Steel Association. Baoshan Iron & Steel, the nation’s biggest publicly traded mill, said on November 12 that it would raise prices for most cold-rolled products for December delivery, the first increase for three months.
Industrial companies’ profits in the first 10 months of the year rose 0.5 per cent to 4 trillion yuan, according to Tuesday’s statement. That compares with a 1.8 per cent drop in the first nine months of 2012 and a 25.3 per cent gain in the January-October period in 2011. The government began reporting monthly year-over-year profit changes in October 2011.
The Shanghai Composite Index fell 0.8 per cent as of 10:16am (HK time). It’s down about 16 per cent in the past year.
Revenue for industrial companies in the first 10 months increased 10.3 per cent from a year earlier to 73.7 trillion yuan, Tuesday’s statistics bureau report showed. Sales rose 29.1 per cent in the January-October period of 2011.
A manufacturing gauge last week showed the first expansion in 13 months for November, according to a preliminary reading from HSBC Holdings and Markit Economics.
Li, named the No. 2 party official this month and set to succeed Wen Jiabao as premier in March, said last week that the nation must boost consumer spending to sustain expansion and cope with a slowdown in the global economy.
China’s economy expanded 7.4 per cent in the third quarter from a year earlier, the slowest pace in three years. Analysts forecast a rebound in the October-December period to 7.7 per cent, based on the median estimate in a Bloomberg News survey conducted November 14-19.
Among 41 industries covered by the statistics bureau data, 27 reported profits rose in the January-October period from a year earlier, including 9 per cent growth in the auto industry and gains of 57.5 per cent in power-company earnings.
Thirteen industries reported a drop in profits, including oil and gas exploration, whose earnings fell 3.2 per cent. The only industry to show losses in the first 10 months was petrochemicals, coking and nuclear-fuel processing, the bureau said.