China’s industrial profits rise for fourth consecutive month

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SHANGHAI (Reuters) – Profits of Chinese industrial companies rose for the fourth consecutive month in August, supported in part by a rebound in prices for raw materials and equipment manufacturing, the statistics bureau said on Sunday.

FILE PHOTO: A worker welds a steel bicycle rim at a sports equipment manufacturing plant in Hangzhou, Zhejiang province, China September 2, 2019. China Daily via REUTERS

China’s recovery has gathered pace as pent-up demand, government stimulus measures and surprisingly resilient exports propel a rebound.

Profits of industrial companies rose 19.1 percent year-over-year in August to 612.81 billion yuan ($ 89.8 billion), according to the bureau of statistics.

This compares to a 19.6% increase in July and is the fourth consecutive month of profit growth.

However, industrial company profits still face external pressures as growing tensions between Washington and Beijing cloud the outlook for world trade.

Profits from raw materials manufacturing rose 32.5% in August, from 14.7% in July, according to Zhu Hong, an official with the statistics bureau. This is partly explained by a rebound in the prices of international commodities such as crude oil and iron ore, he added.

Meanwhile, profits in the general equipment manufacturing sector climbed 37% in August year-on-year, as electrical machinery rose 13.3% in the same period.

Economic indicators in August, ranging from exports to producer prices and factory output, all pointed to a further recovery in the industrial sector.

However, factory activity grew at a slower pace as small businesses faced sluggish market demand and financial strains.

The country has introduced a series of measures to revive the economy, ranging from tax and fee cuts to grace periods for debt reminder.

China’s economy may stagnate if it fails to move up the value chain, as it faces increasing competition from countries with advanced technologies and lower labor costs, warned. economists.

The authorities are committed to boosting investment in strategic industries, including core technology sectors such as 5G, artificial intelligence and semiconductors, and accelerating the development of new materials to secure chains of stable supply.

For January-August, industrial company profits fell 4.4% from a year earlier to 3.72 trillion yuan, better than the 8.1% decline in the first seven months.

The commitments of industrial companies increased by 6.6% year-on-year at the end of August, slightly exceeding the 6.5% at the end of July.

Profits of state-owned industrial enterprises fell 17% on an annual basis for the first eight months of the year, compared to 23.5% in the first seven months.

Private sector profits fell 3.3% in January-August, following the 5.3% drop recorded in January-July.

Reporting by Luoyan Liu and Engen Tham in Shanghai; Edited by William Mallard and Stephen Coates

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