Chinese industrial companies’ profit growth fell last month, a government report showed yesterday, as the nation’s slowing economy curbed demand.
Earnings declined 2.2 percent from a year earlier to 407.6 billion yuan (US$64.2 billion), the National Bureau of Statistics said on its Web site. That compared with a 4.5 percent gain in March.
The deceleration in corporate profit growth underscores concerns that the slowdown in the world’s second-biggest economy is deepening. China’s State Council said on Wednesday that downside risks to growth are increasing and the government will intensify “fine-tuning” policies as needed, signaling it may take more aggressive steps to support the nation’s expansion.
“China’s economy is slowing down, so profit growth will also be slower this year,” Lu Zhengwei (魯政委), Shanghai-based chief economist at Industrial Bank Co, said before the release. “The pace may pick up a bit in coming months if the economy rebounds after policy easing filters through.”
Industrial profit growth for the full year is likely to be in a range of 10 percent to 20 percent, compared with 25.4 percent last year, Lu said.
China’s economy may expand 7.9 percent this quarter from a year earlier, the least since 2009, a Bloomberg survey this month showed, as Europe’s debt crisis crimps exports and property curbs cool domestic demand. That is down from an 8.1 percent pace in the first three months that was the fifth quarterly deceleration.
The government “must proactively take policies and measures to expand demand and to create a favorable policy environment for stable and relatively fast economic growth,” according to a government statement summarizing the State Council’s Wednesday meeting.
A preliminary reading of HSBC’s China purchasing managers’ index released on May 17 indicated manufacturing may contract for a seventh month, adding to signs that growth is weakening. The report followed data that showed industrial production last month rose the least since 2009 and new lending was the lowest this year.
Industrial profit for the first four months fell 1.6 percent from a year earlier to 1.45 trillion yuan, the statistics bureau report showed. That compared with a 1.3 percent drop in the first quarter. Sales in the period rose 12.7 percent to 27 trillion yuan, according to the data.
China’s industrial-profit data cover companies in 41 industries. Starting last year, the statistics bureau raised the minimum annual sales for businesses included in the survey to 20 million yuan from 5 million yuan.
Meanwhile, China will encourage greater private investment in banks as it seeks to fuel growth in an economy that’s losing steam and to aid small businesses that are short of funds.
Qualified companies can buy into lenders through private stock placements or new share subscriptions, equity transfers or mergers and acquisitions, according to guidelines released by the China Banking Regulatory Commission in a statement posted on its Web site on Saturday. The regulator also said it will encourage private investment in trust, financial leasing and auto-financing companies.
The rules aim to “encourage and guide private capital to enter the banking sector, and support financing in private investments,” according to the statement. The regulator also lowered the minimum shareholding of the main initiator for village banks to 15 percent from 20 percent.
China’s Securities Regulatory Commission said it would encourage private investment in securities firms and futures brokerages, and will modify rules to help privately owned companies raise capital.
HORMUZ ISSUE: The US president said he expected crude prices to drop at the end of the war, which he called a ‘minor excursion’ that could continue ‘for a little while’ The United Arab Emirates (UAE) and Kuwait started reducing oil production, as the near-closure of the crucial Strait of Hormuz ripples through energy markets and affects global supply. Abu Dhabi National Oil Co (ADNOC) is “managing offshore production levels to address storage requirements,” the company said in a statement, without giving details. Kuwait Petroleum Corp said it was lowering production at its oil fields and refineries after “Iranian threats against safe passage of ships through the Strait of Hormuz.” The war in the Middle East has all but closed Hormuz, the narrow waterway linking the Persian Gulf to the open seas,
Taiwan has enough crude oil reserves for more than 100 days and sufficient natural gas reserves for more than 11 days, both above the regulatory safety requirement, Minister of Economic Affairs Kung Ming-hsin (龔明鑫) said yesterday, adding that the government would prioritize domestic price stability as conflicts in the Middle East continue. Overall, energy supply for this month is secure, and the government is continuing efforts to ensure sufficient supply for next month, Kung told reporters after meeting with representatives from business groups at the ministry in Taipei. The ministry has been holding daily cross-ministry meetings at the Executive Yuan to ensure
RATIONING: The proposal would give the Trump administration ample leverage to negotiate investments in the US as it decides how many chips to give each country US officials are debating a new regulatory framework for exporting artificial intelligence (AI) chips and are considering requiring foreign nations to invest in US AI data centers or security guarantees as a condition for granting exports of 200,000 chips or more, according to a document seen by Reuters. The rules are not yet final and could change. They would be the first attempt to regulate the flow of AI chips to US allies and partners since US President Donald Trump’s administration said it rescinded its predecessor’s so-called AI diffusion rules. Those rules sought to keep a significant amount of AI
A new worry has been rippling across the stock market lately: Entire businesses, not just their employees, might be thrown out of work. While most economists say fears of an artificial intelligence (AI) job apocalypse are overblown, seismic shifts have happened in the past after big tech breakthroughs. The IT revolution of the 1990s led to a surge in productivity that sped up the US economy for several years. It also rendered companies or even industries largely redundant — from travel agents and stockbrokers to classified advertising and newspapers, or video rental stores. Economists expect AI would deliver higher productivity,
RSS