China's industrial company profits rebound

Profits by China's industrial companies in the first 11 months have expanded for the first time in a year, consolidating the recovery in the world's third-largest economy.

Net earnings by Chinese manufacturers rose 7.8 percent from a year earlier to 2.58 trillion yuan (US$377.7 billion) through November, the National Bureau of Statistics said Monday.

The rise followed a decline of 3.4 percent in the January-October period and contrasted sharply with a plunge of 37.3 percent in the first two months when China's economy was engulfed by the global financial crisis.

"The recovery in industrial profits was faster and stronger than our expectations," said Li Maoyu, an analyst at Changjiang Securities Co.

"Power shortages seem to have had a limited impact on industries.

"With better conditions in the overall economy, we are optimistic growth will continue."

In an interview last month, Li predicted it may take longer for profits to grow because China's energy firms had reduced gas supplies to industry after heavy snow hit north China in November and households took precedence.

Xue Jun, an analyst at CITIC Securities Co, said China's relatively easy fiscal policies and an improving export sector would lay solid foundations for a quicker growth in industrial profits.

"Domestic demand is well supported, while overseas sales may grow again next year after the world emerges from the crisis," Xue said.

Premier Wen Jiabao said on Sunday that China would maintain its pro-active fiscal policy and moderately loose monetary policy next year to secure the achievements the nation had already attained.

China's top leaders have also reiterated that the nation was determined to fully implement its recovery stimulus package.

Vice Commerce Minister Zhong Shan said at a forum during the weekend that China's export sector was "very likely" to return to growth next year if there were no majorfluctuations in the global and domestic economies.

Zhong said China's exports had managed to retain strong global market share amid the economic recession, and the country may eclipse Germany to become the world's biggest exporter this year.

The profit advance among industrial companies was led by private manufacturers, whose earnings jumped 17.4 percent year on year to 684.9 billion yuan in the first 11 months.

Foreign-invested companies and those from Hong Kong, Macau and Taiwan reported their earnings increased 16.9 percent to 751.1 billion yuan.

But profits of state-owned enterprises still declined 4.5 percent to 751.4 billion yuan due to losses by oil and natural gas explorers and steel makers.

Profits of oil and natural gas exploring companies dropped 60.7 percent from a year ago through November.

Steel producers saw earnings fall 42.6 percent in the same period.

Power firms reported their profits climbed 286.6 percent, the largest jump among the 39 industries tracked.

China's industrial production in the first 11 months swelled an annualized 10.3 percent, keeping a steady expansion momentum, according to earlier reports by the bureau.

(Source: Shanghai Daily)