China’s industrial corporations’ profits are holding up this year thanks to a boost from steel and refining, even as last month’s earnings slowed from a three-year high.
Industrial profits in January to last month rose 8.4 percent from a year earlier to 4.64 trillion yuan (US$685 billion), the Chinese National Bureau of Statistics (NBS) said yesterday.
Earnings last month rose 7.7 percent from a year earlier to 577.1 billion yuan, less than the jump of 19.5 percent in August that was the biggest in three years.
“The figures aren’t bad in fact, especially in the state sector, which is doing very well,” said Zhou Hao (周浩), an economist at Commerzbank AG in Singapore. “The biggest challenge facing companies is to strike a balance between cutting debt and making a profit. Controlling debt risk now becomes a priority for the government as corporate profits have been stabilized.”
Steel production is leading the charge with a 272.4 percent jump in the fist nine months versus a year earlier, followed closely by a 263.8 percent jump for oil refining earnings.
Years of deflation for factories has abated, with producer prices up last month for the first time since 2012, as global commodity prices recover and stimulus supports domestic demand.
With the economy stable, policymakers are stepping up efforts to curb risks from rampant growth in shadow banking products, elevated corporate debt and surging home prices. Early private indicators for this month give mixed readings, reflecting tension between resilient domestic demand and fresh challenges as policy switches to reining in financial risks.
“Profit and revenue growth may benefit further from improving post-factory price pressures in the coming months,” said Donna Kwok (郭浩庄), a senior China economist at UBS Group AG in Hong Kong. “Property tightening measures will have only a modest effect, but any dampening effect will take time to trickle through to property construction and investment activities, so support for industrial demand and sales should hold up.”
Still, the NBS said in a statement that foreign and domestic demand remain weak and coal and steel companies have taken on more debt.
“We should take heed of corporate debt risks as we cut overcapacity,” the NBS said.
The agency said the month-over-month moderation was partly because profits in August last year were especially weak, then stronger the next month.
DIVIDED VIEWS: Although the Fed agreed on holding rates steady, some officials see no rate cuts for this year, while 10 policymakers foresee two or more cuts There are a lot of unknowns about the outlook for the economy and interest rates, but US Federal Reserve Chair Jerome Powell signaled at least one thing seems certain: Higher prices are coming. Fed policymakers voted unanimously to hold interest rates steady at a range of 4.25 percent to 4.50 percent for a fourth straight meeting on Wednesday, as they await clarity on whether tariffs would leave a one-time or more lasting mark on inflation. Powell said it is still unclear how much of the bill would fall on the shoulders of consumers, but he expects to learn more about tariffs
NOT JUSTIFIED: The bank’s governor said there would only be a rate cut if inflation falls below 1.5% and economic conditions deteriorate, which have not been detected The central bank yesterday kept its key interest rates unchanged for a fifth consecutive quarter, aligning with market expectations, while slightly lowering its inflation outlook amid signs of cooling price pressures. The move came after the US Federal Reserve held rates steady overnight, despite pressure from US President Donald Trump to cut borrowing costs. Central bank board members unanimously voted to maintain the discount rate at 2 percent, the secured loan rate at 2.375 percent and the overnight lending rate at 4.25 percent. “We consider the policy decision appropriate, although it suggests tightening leaning after factoring in slackening inflation and stable GDP growth,”
Meta Platforms Inc offered US$100 million bonuses to OpenAI employees in an unsuccessful bid to poach the ChatGPT maker’s talent and strengthen its own generative artificial intelligence (AI) teams, OpenAI CEO Sam Altman has said. Facebook’s parent company — a competitor of OpenAI — also offered “giant” annual salaries exceeding US$100 million to OpenAI staffers, Altman said in an interview on the Uncapped with Jack Altman podcast released on Tuesday. “It is crazy,” Sam Altman told his brother Jack in the interview. “I’m really happy that at least so far none of our best people have decided to take them
PLANS: MSI is also planning to upgrade its service center in the Netherlands Micro-Star International Co (MSI, 微星) yesterday said it plans to set up a server assembly line at its Poland service center this year at the earliest. The computer and peripherals manufacturer expects that the new server assembly line would shorten transportation times in shipments to European countries, a company spokesperson told the Taipei Times by telephone. MSI manufactures motherboards, graphics cards, notebook computers, servers, optical storage devices and communication devices. The company operates plants in Taiwan and China, and runs a global network of service centers. The company is also considering upgrading its service center in the Netherlands into a
RSS