Chinese industrial profits rise 25.3 per cent

BEIJING: Chinese industrial companies' profits rose 25.3 per cent from a year earlier in the first 10 months of 2011 even as Europe's sovereign-debt crisis dims the outlook for demand and growth.

Net income climbed to 4.12 trillion yuan ($646 billion), the National Bureau of Statistics said on its website yesterday. That compares with a 27 per cent gain for January-through-September. Sales climbed 29.1 per cent to 68.18 trillion yuan.

Government-mandated caps on electricity prices have damped the profitability of power plants, while a crackdown on property speculation is adding to the risk of a deeper slowdown in the fastest-growing major economy. Manufacturing may contract this month by the most since March 2009, according to a preliminary purchasing managers' index.

"If economic growth slows further, companies' profit outlook won't be very optimistic," Li Wei, an economist at Standard Chartered in Shanghai, said before yesterday's release. "Price distortions caused by the government's administrative controls have affected the operations of power makers and energy producers." The debt crisis and austerity measures are capping demand in Europe, China's biggest market for exports. The benchmark Shanghai Composite Index of stocks has tumbled 15 per cent this year on concern that growth will falter.

China's central bank fuelled speculation that monetary policy may be eased by this week letting reserve ratios for more than 20 rural credit cooperatives fall by half a percentage point.

Growth slowdown
China's economic growth may slow to 9.2 per cent this year and moderate further in 2012, as companies are squeezed by funding difficulties, labor costs, and raw-material prices, Huang Libin, an official from the Ministry of Industry and Information Technology, had earlier said on November 24. In 2010, the expansion was 10.4 per cent.

The industrial profits data cover firms with annual sales from their main business of at least 20 million yuan in 39 industries including oil and gas exploration, transportation equipment manufacturing, telecommunications and power generation.

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