China’s industrial enterprises see profits surge 11.5% in June, faster than May growth

Source: Global Times Published: 2020/7/27 11:48:20 Last Updated: 2020/7/27 13:06:16

Aerial photo taken on July 22, 2020 shows the Dateng Gorge water conservancy project under construction in Guiping City, south China's Guangxi Zhuang Autonomous Region. Located in the city of Guiping, the project is designed for multiple purposes including flood control, navigation and power generation. (Xinhua/Lei Jiaxing)

China's major industrial enterprises continued to profit in June, growing much faster than in May, according to the latest data released by the National Bureau of Statistics (NBS) on Monday. 

In June, China's above-scale industrial enterprises earned profits of 666.55 billion yuan ($95.05billion), up 11.5 percent on yearly basis and faster than a 6 percent growth in May, the NBS data showed. 

From January to June, major Chinese enterprises saw profits slump 12.8 percent on a yearly basis to 2.5 trillion yuan but narrowing from a 6.3 percent decline in the first five months of the year. 

China's industrial activities have taken a blow from the coronavirus outbreak, but the sector has picked up recently, as the epidemic was brought under control through strict government supervision, and economic activities returned to normal. 

In the second quarter, China's industrial enterprises saw profits rise 4.8 percent, which is a great leap compared with the 36.7 percent fall in the first quarter, the NBS data showed. 

Liu Xuezhi, a macroeconomics analyst, said that the rebound in China's industrial sector is within market expectations as China's industrial enterprises continue to resume production and increase revenues. 

"Additionally, recent government policies are encouraging company production and stimulating market demand. This will in turn drive up companies' revenues and profits," he told the Global Times, adding that rising industrial profitability also shows the effectiveness of China's policies, such as reducing company costs. 

According to the NBS data, high-tech industries are performing well amid the coronavirus pandemic, while pressure is relatively high on the bulk commodity industry. 

In the first six months of the year, computing, telecommunications and electric equipment manufacturing profits rose by 27.2 percent, while oil and natural gas mining industries saw profits sink 72.6 percent. 

State-owned enterprises, where traditional heavy industries took a large proportion, seemed to face greater pressure than overseas and private companies. Among the surveyed industrial enterprises, state-owned enterprises earned a profit of 661.4 billion yuan,down 28.5 percent on a yearly basis, while the profits of overseas and private companies only fell by 8.8 and 8.4 percent,respectively. 

Liu predicted that China's economic operations will improve further in the second half of the year and the corporate profit growth trend will be maintained. 

But he said China's industrial companies will see negative growth for the whole year due to the epidemic.

Ye Hang, an economics professor at the College of Economics under Zhejiang University,said that the continued acceleration of industrial enterprises' profit growth depends on whether the government rolls out further policies to stimulate domestic demand. 

"If China relies on exports as much as it did a few years ago, and does not roll out enough policies to activate domestic demand, I think the profit growth trend will be difficult to maintain for industrial enterprises," Ye told the Global Times, adding that such policies would include further personal tax cuts.

Posted in: ECONOMY

blog comments powered by Disqus