China economy

Industrial profits see first rise in six months

Fourth quarter rebound will likely extend to next year amid signs growth is picking up again

PUBLISHED : Sunday, 28 October, 2012, 12:00am
UPDATED : Monday, 30 May, 2016, 5:00pm

Mainland industrial companies' profits rose last month for the first time in six months, adding to signs growth is picking up after a seven-quarter slowdown.

Net income rose 7.8 per cent from a year earlier to 464.3 billion yuan (HK$572.3 billion), the National Bureau of Statistics said yesterday in Beijing. That compared with a 6.2 per cent decline in August, the year's largest drop.

The report followed data showing that industrial production and retail sales had accelerated last month and a manufacturing gauge had risen this month.

Premier Wen Jiabao said the economy would keep showing "positive changes", reported the official Xinhua News Agency last week.

"As upstream commodity prices are falling, Chinese corporate profits have room to rise," said Wang Tao, chief China economist at UBS in Hong Kong.

Industrial companies' profits in the first nine months of the year declined 1.8 per cent to 3.5 trillion yuan, according to yesterday's statement. That compares with a 3.1 per cent drop in the first eight months and a 27 per cent gain in the same period last year.

Revenue in the first nine months increased 10.2 per cent from a year earlier to 65.7 trillion yuan, today's statistics bureau report showed. Sales rose 29.6 per cent in last year's January-September period.

The economy would probably rebound in the fourth quarter, Jia Kang , a Ministry of Finance researcher, said at a conference in Beijing yesterday.

The nation will achieve its full-year growth target of 7.5 per cent and "the rebound in the fourth quarter is likely to extend into next year," he said.

"For short-term growth prospects, there will be no big problem," said Jia. "China's pro-growth policies will continue to have effect."

The budget deficit might also increase a little next year, "but there will be no significant increase", Jia said. And while more local government bonds might be issued next year, "overall local government debt risks are under control", he said.

Preventing any further slowdown is a chief challenge for the ruling Communist Party as it begins its once-in-a-decade leadership transition with a congress set to start on November 8.