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People's Daily Online>>China Business

Demand gives rise to increase in firms' profits

By Wang Yanlin (Shanghai Daily)

11:21, February 04, 2012

Profit growth among China's industrial companies quickened in December, indicating a stabilizing economy thanks to healthy domestic demand and loosening policies.

The net earnings of Chinese manufacturers expanded 31.5 percent from a year earlier to 790 billion yuan (US$125 billion) in December, the National Bureau of Statistics said yesterday.

Last year's manufacturing profits totaled 5.45 trillion yuan, up 25.4 percent annually, which was faster than the pace of 24.4 percent in the first 11 months. But the rate was still significantly weaker than 2010's 50 percent.

"China's manufacturing activities seem to be gathering momentum again," said Li Maoyu, a Changjiang Securities Co analyst. "It is largely the result of healthy domestic demand, and the profit growth is likely be sustainable amid a stabler economy."

But Xue Jun, an analyst at CITIC Securities Co, warned that shrinking external demand would continue to threaten China's industrial companies.

"The eurozone debt crisis shows no sign of recovery, and the Chinese currency may accelerate in appreciation, making exports more expensive," Xue said.

He expected some fluctuations in China's industrial production over the next few months.

The official Purchasing Managers' Index, a comprehensive gauge of manufacturing activities, edged up 0.2 points from December to 50.5 last month.

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