Profits at China’s industrial firms last month declined at a faster pace than a month earlier, as deflationary pressures sap the strength of corporate finances.
Last month’s industrial profits at large Chinese companies fell 27.1 percent from a year earlier, after a 17.8 percent plunge in August, the National Bureau of Statistics said in a statement yesterday. Profits decreased 3.5 percent in the first nine months from the same period last year.
The data was “affected by factors such as high base in the same period last year” the bureau said in a statement.
Photo: AFP
Industrial profits provide a key measure of the financial health of factories, mines and utilities that can affect their investment decisions in the months to come.
Weaker profits became emblematic of the challenges facing China’s US$18 trillion economy, prompting measures such as interest rate cuts since late last month.
The country’s top legislative body is to hold a highly anticipated session in Beijing on Nov. 4 to 8, as investors watch for any approval of further fiscal stimulus to revive growth.
Economists expect the meeting to confirm a plan to refinance local governments’ debt and issuance of sovereign bonds to inject capital into banks.
Investors have been on the lookout for fresh stimulus in the form of greater public borrowing and spending, but opinions differ over whether it would materialize this year.
Deepening deflation in producer prices was likely a drag on company earnings despite faster growth in industrial output, Bloomberg Economics said before the release. Factory-gate prices extended declines for a 24th straight month last month, with the recent drop accelerating, reflecting weak domestic demand.
The economy expanded 4.6 percent in the July-to-September period from a year earlier, the slowest pace since March last year.
The growth of the high-technology sector has offered signs of hope for the economy, with profit for the industry’s manufacturers climbing 6.3 percent in the first nine months, according to the statistics bureau.
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