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People's Daily Online>>China Business

Industrial profit growth ebbs

By Chen Jia and He Wei (China Daily)

09:57, December 28, 2011

Rising costs and tight monetary policy squeeze manufacturers

BEIJING - Growth in China's industrial profits slowed in the first 11 months of this year, in what analysts said was a sign of deteriorating economic conditions that could push the government to do more to support business expansion.

The profits of industrial companies rose 24.4 percent year-on-year to 4.66 trillion yuan ($737 billion) in the January-to-November period, slowing from 25.3-percent growth in the first 10 months and a 27-percent increase in the first three quarters, the National Bureau of Statistics (NBS) announced on its website on Tuesday.

In November alone, total industrial profits climbed 17.9 percent year-on-year to 542.1 billion yuan, compared with an expansion of 12.5 percent in October, according to the NBS.

But State-owned companies' net income declined 14.2 percent last month to 102.4 billion yuan.

Surging production costs, tight monetary policy and shrinking overseas demand have squeezed industrial companies' profits, in line with the dimming global economic growth outlook and the European debt crisis, analysts said.

The slowing profit growth will exacerbate operating pressures on industrial companies and pressure the government to loosen policy, said Qu Hongbin, chief China economist and co-head of Asian Economic Research at HSBC Group.

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