China industrial profits hit a 3-month high

Profits of China's industrial firms in August rose at the fastest pace in three years due to a low base, rising sales and lower costs, statistics released yesterday showed.

Industrial earnings last month surged 19.5 percent to 534.8 billion yuan (.2 billion), with auto and steel sectors performing the best, the National Bureau of Statistics said. It said it was the fastest monthly rate since 2013. July's growth was 11 percent.

The data reflects a string of August data that has shown signs of stabilized economic activities.

Industrial sales gained 6.3 percent in the month year on year. Prices rebounded higher by 0.9 percent from July, and the cost per 100 yuan revenue decreased for the third month to 86.14 yuan.

By sectors, auto and steel performed best, with manufacturing profits rising 14.1 percent from January to August.

Foreign firms' earnings also added 10 percent from a year earlier. Mining industry profits fell sharply by 70.9 percent during the period.

"The fast pace of profits last month was largely because of a lower profit base from a year ago," said He Ping, an official from the NBS industry division.

"We have to confront the fact that the fundamentals to support a sustained industrial profit growth is still fragile.

"Both domestic and overseas demands are weak, and the time it takes companies to get back the money they're owed remains relatively long," He said, adding that traditional industries will continue to struggle, particularly in sectors suffering from overcapacity.

Propped up by a property market boom and government spending, the world's second-largest economy has shown signs of stabilization as new credit, industrial output, fixed-asset investment and retail sales picked up in August.

Shenwan Hongyuan Securities Co raised the year's forecast for industrial profit to 8 percent. Economists argue that government stimulus may weaken due to renewed focus on the supply-side reform, and a tightening of housing regulation will lead to a bigger bubble and place the market under risks.

Source:Shanghai daily

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