Industrial profits rise 6% in May, first gain this year: NBS
Published: Jun 28, 2020 06:08 PM

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As the resumption of business and production is underway, industrial enterprises continued to improve their performance, with growth in May turning positive for the first time this year. Analyst said that digitalization, price advantages and policy support will be the driving forces for sustainable development in the post-pandemic period.

Compared with the first two quarters, it is expected that the profits of industrial enterprises above designated size will maintain a growth rate of 6-8 percent on average in the second half of this year, with May being the starting point of economic resumption, industry analysts said.

This comment came after a report released by the National Bureau of Statistics (NBS) on Sunday stated that China's industrial enterprises posted profits of 582.34 billion yuan ($82.2 billion) in May, up 6.0 percent from the previous year.

In May, the cost per 100 yuan of operating income of enterprises above designated size was 84.29 yuan, up by 0.21 yuan year-on-year, and the increase was one yuan less than that in April, relieving the pressure brought about by a sharp rise in unit costs since March and April, the report said.

Meanwhile, the price fluctuation of industrial products increased the profit space of enterprises. Producer prices fell 3.7 percent in May on the previous year, 0.6 percentage points more than in April.

The key driver behind this positive growth is that the gradual recovery of various industries after the resumption of work and production has eased pressure on rising costs, as well as the transformation in digitalization, analysts said.

Hong Tao, director of the Institute of Business Economics at Beijing Technology and Business University, told Global Times on Sunday that the global economic downturn has slowed the rising prices of raw materials such as fossil fuels and boosted the transformation of digitalization, speeding up the growth of the manufacturing sector.

Due to the effect of a number of favorable factors, such as the easing of cost pressures, improvements in market demand and the effect of relevant supporting policies, the profits of the petroleum refining, electric power, chemical and steel industries have all improved significantly, becoming a driving force behind market growth, analysts said.

China's economic order returned to normal in May, with some indicators of industrial physical volume picking up significantly, including power generation, which increased by 4.3 percent in May year-on-year, four percentage points higher than that in April, according to Meng Wei, spokesperson for the National Development and Reform Commission, at a press conference on June 16.

"Digital development also makes it possible for many businesses to run even when the world is still shadowed by the ongoing outbreak," Hong said.

However, although industrial profits rose in May for the first time this year, market demand is still weak following the impact of the pandemic, and the sustainability of this recovery remains to be seen.

From January to May, the profits of industrial enterprises above designated size nationwide totaled 1.84 trillion yuan, down 19.3 percent year on year, according to another report by the NBS on Sunday.

"At present, the market is not active enough to drive the economy towards a full recovery after the pandemic period," Hong said. 

"Sustainable development can be achieved by making full use of the price advantages of the resource market and helping businesses to expand the market while reducing costs."

Meanwhile, new infrastructure investment has been and will continue to be the new impetus to China's post-epidemic economic growth and will bring a new round of market opportunities to relevant enterprises, Chen Naixing, a research fellow with the Institute of Industrial Economics of the Chinese Academy of Social Sciences, told Global Times on Sunday.

"Special bonds issued by central and local governments will further boost infrastructure investment as one of the important driving forces of industrial resumption," Chen noted.

In the long run, innovations in digital technologies such as artificial intelligence, 5G, industrial Internet and big data will provide technological capabilities for China's transformation and development, Chen said.