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Industrial profits rise but recovery remains weak

By Richard Fu (Shanghai Daily)

09:45, May 28, 2013

Industrial profits growth quickened in China last month, led by the power generation and auto manufacturing sectors, the National Bureau of Statistics said yesterday.

Combined profits posted by major industrial companies rose 9.3 percent from a year earlier to 436.7 billion yuan (US$71.2 billion), after gaining 5.3 percent in March.

Yu Jianxun, of the bureau's industrial department, said the figures were skewed by those in the same two months last year. Industrial profits in April 2012 fell 2.2 percent year on year after March's 4.5 percent gain.

That suggests recovery in the world's second-largest economy may remain weak amid slack demand both home and abroad, prompting speculation of policy changes if the situation deteriorates.

In the January-April period, industrial profits rose 11.4 percent to 1.61 trillion yuan, down from a 12.1 percent gain in the first quarter, the bureau said. Growth in revenue was 11.9 percent in January-April, unchanged from that in January-March. There was no figure for April alone.

"Industrial profit and revenue growth remained stable," said Yang Weixiao, an analyst at Lianxun Securities.

"But we also saw some divergence between them. That means industrial companies' profitability may have been hurt a lot."

Baoshan Iron & Steel Co, China's biggest listed steel company, has announced that prices for June orders will be reduced, its first cut in nine months.

Power companies more than doubled their aggregate profits to 28.1 billion yuan in April, thanks to lower costs.

Car manufacturers posted 41.8 billion yuan in profits, up 18.7 percent from a year earlier because of healthy demand, especially for new models, Yu said.

The computer, telecommunication and electronic equipment sector also helped drive growth.

The profit and revenue data are based on a survey of companies with annual sales of 20 million yuan or more. The latest data comes a week after the HSBC/Markit flash purchasing managers' index showed manufacturing contracted in May for the first time in seven months.

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