China’s Sept industrial profits surge most in nearly six years

BEIJING: Profits for China’s industrial powerhouses surged the most in nearly six years in September as a government crackdown on air pollution sparked fears of winter supply shortages and sent prices of finished goods like steel and copper sharply higher.
Sustained earnings growth will give China’s policymakers more room to restructure bloated and often inefficient state-owned enterprises, which dominate the industrial landscape and account for a hefty portion of the country’s corporate debt.
Industrial profits in September rose 27.7 per cent from a year earlier to 662.18 billion yuan ($99.46 billion), accelerating from a 24 per cent jump in August, the National Bureau of Statistics (NBS) said on its website on Friday.
That was the sharpest monthly gain since December 2011, when profits leapt 31.5 per cent.
The NBS attributed the September surge to stronger growth in production and sales and higher prices for manufactured goods, as well as a pick-up in earnings in sectors such as electricity, alcohol and electronics.
“We predict the industrial sector will remain on a steady, improving trajectory in the fourth quarter,” Zheng Lixin, a spokesman for the industry ministry, told a media briefing.
For the first nine months of the year, the firms notched up profits of 5.58 trillion yuan, a 22.8 per cent jump from the same period last year and up a touch from January-August.
Industrial firms’ liabilities increased 6.7 per cent in September on-year, compared with a rise of 6.4 per cent in the first eight months of the year.
While a year-long construction boom is starting to show signs of fatigue, still robust industrial earnings will be good news for the country’s leaders who gathered for a key Communist Party Congress over the past week to set political and economic priorities for the next five years.
President Xi Jinping opened the gathering stressing the need to move from high-speed to high-quality growth.
While reiterating a commitment to give market forces freer rein in the world’s second-largest economy, Xi also said the government would strengthen the role of state firms, raising questions about whether Beijing will pursue painful reforms in the sector which some analysts say are long overdue.
Market watchers had expected solid September earnings after producer prices rose by a higher-than-forecast 6.9 per cent on-year, boosted by strong demand for building materials.
Most analysts have maintained those price gains and industrial profits would start to moderate in coming months as measures to cool China’s heated housing market and a government crackdown on riskier lending starts to bite. — Reuters