China's giant postal system turned a profit of 160 million yuan (about HK$149 million) for last month after years of losses. Liu Liqing, postmaster-general of the State Post Bureau, hailed the result as 'encouraging news', the China Securities newspaper reported yesterday. China Post has always ended the year in the red despite price rises in recent years. China Post lost 14.2 billion yuan in 1998, the year its telecommunications arm was hived off, ending cross-subsidies from its more lucrative half. The postal system, employing 500,000 in 67,000 offices, had blamed its woes on prices insufficient to cover costs and lack of price-setting authorities. China Post was targeting 11 per cent year-on-year growth in operating income to 47 billion yuan to help it return to the black by December, it said on its Web site. That would help offset the phase-out of state subsidies by 2003, according to China Securities. Such subsidies would dwindle to three billion yuan this year and one billion yuan next year from eight billion yuan in 1999. Although sceptics may view it as a brief respite in China Post's hard luck, the slim profit is likely to help its reported plan for an overseas listing.