China’s major industrial companies posted increased profit growth in the first five months of the year, data revealed yesterday.
Profits at major industrial firms grew 16.5 percent in the period, quickening from the 15 percent expansion for the January-April period, according to the National Bureau of Statistics.
In May alone, combined profits of industrial companies with annual revenue of more than 20 million yuan (US$3 million) each went up 21.1 percent year on year, slightly retreating from the 21.9 percent gain in April.
Among them, state-owned enterprises made a combined profit of 810.35 billion yuan in the first five months, up 28.7 percent from the same period of last year. Collective-owned enterprises, joint-stock companies, overseas-funded firms and private companies saw profit growth of 4.4 percent, 20.6 percent, 6.9 percent and 10.6 percent respectively.
The bureau’s statistician He Ping attributed sound growth to the country’s supply-side structural reforms, which led to falling production costs and lower leverage ratios.
“The supply-side structural reform keeps showing its effectiveness and achievements,” said He.
The cost and expense per 100 yuan of revenue from the main business was down 0.35 yuan to 92.59 yuan in the January-May period from a year earlier. The cost dropped 0.31 yuan to 84.49 yuan.
The leverage rate also dropped, with the debt-to-asset ratio down 0.6 percentage points to 56.6 percent at the end of May, the bureau said.
Its report also pointed out that the overall efficiency of industrial enterprises continued to improve, with faster inventory turnover of products and stronger profitability.
Among the 41 industries surveyed, 31 posted year-on-year profit growth during the first five months.
Manufacturing, which accounted for 84.8 percent of the total industrial profit, saw the sector’s combined profit expand 13.8 percent. The mining industry’s profit surged 41.6 percent, while those of power generation, heating, fuel gas, water production and supply companies went up 26.1 percent.
The ferrous metal smelting and rolling processing industry showed an 110 percent jump in profit in the January-May period.
The non-metallic mineral products industry rose 44.6 percent, chemical raw materials and manufacturing of chemical products grew 27.7 percent, petroleum and natural gas extraction was up 260 percent, and the electric and thermal power production and supply sector advanced 27.8 percent.
“Despite slight slowdown in growth in May compared with April, the total profit of Chinese industrial enterprises saw rapid growth amid lower costs and also higher prices,” He said.
The Producer Price Index rose 4.1 percent in May from a year earlier, 0.7 percentage points higher than the growth in April, while the industrial producer purchase price picked up 0.6 percentage points from April to add 4.3 percent year on year.
According to preliminary calculations, the positive effect of price changes on profit growth in May was 4.3 percentage points greater than the previous month, the bureau said.
Yesterday’s data was the latest in a slew of economic indicators that showed China’s economic resilience, which prompted global institutions such as the World Bank to raise their economic forecasts for the country.
Earlier data showed growth in energy consumption, freight traffic and producer prices all picked up last month, pointing to a firming real economy and progress in structural transformation.
China’s economy grew 6.8 percent year on year in the first quarter, above the target of around 6.5 percent.
Earlier this month, the World Bank upgraded its forecast for China’s economic growth in 2018 to 6.5 percent, 0.1 percentage point higher than its January forecast. The World Bank’s latest China Economic Update said economic activity remained resilient, and the new economy is now a more prominent source of growth.
Morgan Stanley expects China’s GDP to grow 6.6 percent in 2018, up from its previous projection of 6.5 percent.