News & Reports News Year 2011 september,2011 Industrial profit rise weakens

Industrial profit rise weakens

CHINA'S industrial companies have reported that their profit growth continued to weaken in the first eight months amid the government's tighter credit policies and a contraction in manufacturing activities, the National Bureau of Statistics said yesterday.
Their net earnings rose 28.2 percent from a year earlier to 3.23 trillion yuan (US$505 billion) in the year to August. The pace slowed from the 28.3 percent growth in the first seven months and 28.7 percent in the first half. For the same period last year, profit gains averaged more than 40 percent.
"Manufacturers may see the pace of profit growth moderate when production costs continue to rise and prudent monetary policies stay in place," said Li Maoyu, an analyst at Changjiang Securities. "It is an increasingly tough time for producers of thin margin consumer goods."
Cui Li, an economist at Royal Bank of Scotland, said it is not hard to understand the plight faced by small- and medium-size enterprises.
"SMEs try to become more competitive amid a depressed global market by upgrading their products and injecting more capital in research and development," Cui said. "But it needs a lot of money which banks are not willing to lend to them.''
The problems in getting credit have pushed private lending rates to soar in Wenzhou, a city famous for SMEs, earlier media reports said.
However, private businesses remained the driving force of the profit gain in the first eight months. Their profit surged 45.6 percent from a year earlier to 887.1 billion yuan.
Meanwhile, the Producer Price Index, the factory-gate measurement of inflation, gained 7.3 percent from a year earlier. It eased from 7.5 percent in July but was still higher than June's 7.1 percent.
A preliminary reading for the HSBC Purchasing Managers' Index, an indicator of the industrial sector's operating conditions, showed that China's manufacturing activities may shrink again this month.
The HSBC Flash PMI, released last week, was 49.4 in September, down from the final of 49.9 in August. A reading below 50 is contraction.
CHINA'S industrial companies have reported that their profit growth continued to weaken in the first eight months amid the government's tighter credit policies and a contraction in manufacturing activities, the National Bureau of Statistics said yesterday.
Their net earnings rose 28.2 percent from a year earlier to 3.23 trillion yuan (US$505 billion) in the year to August. The pace slowed from the 28.3 percent growth in the first seven months and 28.7 percent in the first half. For the same period last year, profit gains averaged more than 40 percent. 
"Manufacturers may see the pace of profit growth moderate when production costs continue to rise and prudent monetary policies stay in place," said Li Maoyu, an analyst at Changjiang Securities. "It is an increasingly tough time for producers of thin margin consumer goods."
Cui Li, an economist at Royal Bank of Scotland, said it is not hard to understand the plight faced by small- and medium-size enterprises.
"SMEs try to become more competitive amid a depressed global market by upgrading their products and injecting more capital in research and development," Cui said. "But it needs a lot of money which banks are not willing to lend to them.''
The problems in getting credit have pushed private lending rates to soar in Wenzhou, a city famous for SMEs, earlier media reports said. 
However, private businesses remained the driving force of the profit gain in the first eight months. Their profit surged 45.6 percent from a year earlier to 887.1 billion yuan. 
Meanwhile, the Producer Price Index, the factory-gate measurement of inflation, gained 7.3 percent from a year earlier. It eased from 7.5 percent in July but was still higher than June's 7.1 percent.
A preliminary reading for the HSBC Purchasing Managers' Index, an indicator of the industrial sector's operating conditions, showed that China's manufacturing activities may shrink again this month. 
The HSBC Flash PMI, released last week, was 49.4 in September, down from the final of 49.9 in August. A reading below 50 is contraction.