China's industrial profits continued to grow at a faster pace in the first half of this year, the latest evidence that the world's second-largest economy is gaining strength against downward pressures.
Industrial businesses saw their profits rise by 11.4 percent year on year, with the growth rate hitting a new high this year, data released by the National Bureau of Statistics (NBS) showed on Sunday.
Total profits of industrial companies with annual business revenue of more than 20 million yuan (3.2 million U.S. dollars) reached 2.86 trillion yuan, the NBS said.
Profit growth was up markedly from the increase of less than 10 percent recorded in the first five months.
The faster-than-expected growth was due to strong growth in June, when industrial firms raked in 588 billion yuan in profits, up by 17.9 percent from a year ago.
He Ping, statistician at NBS, attributed the increase to the rising sales and dropping costs of industrial firms in June and admitted that the low base in the same period last year also contributed to the high growth.
In the Jan.-June period, profits of foreign-funded enterprises and companies with funds from Hong Kong, Macao and Taiwan rose the most by 15.3 percent year on year to 691.76 billion yuan.
State-owned and state-holding industrial enterprises had 761.35 billion yuan in profits, up 5.6 percent from a year ago. Profits of private firms climbed 13.5 percent year on year to 910.49 billion yuan, while joint-stock enterprises took in total profits of 1.69 trillion yuan, up 10.8 percent year on year.
By sector, industrial enterprises in the mining industry reached profits of 340.05 billion yuan in the first half, down 14.6 percent year on year. Companies in the manufacturing sector saw 15.6-percent year-on-year growth to hit 2.3 trillion yuan in the period.
Of a total of 41 industrial sectors, profits of 35 sectors rose, one remained flat and five dropped in the first half from the same period last year.
Despite the rising trend, He pointed out that most of the new profits were collected by a few industries, and industrial enterprises still face some headwinds.
He of the NBS noted that corporate efficiency fell and companies started to face piling stocks and rising due balances.
"Those factors will exert negative influence on the companies' operations and slow their growth pace," He said.
ECONOMY LOOKS UP
The rising industrial profits added to the evidence that the worst of the slowdown that hit China's economy during the first quarter is over.
On July 16, the NBS revealed that China's economic growth rebounded to 7.5 percent in the second quarter, showing strong resilience after a gloomy Jan.-March period.
HSBC China's reading of the country's manufacturing purchasing managers' index for July rose to 52 points, its highest since the start of 2013.
Major financial institutions have raised their predictions in light of improving economic conditions and effective targeted stimuli from the Chinese central government. Merrill Lynch raised its 2014 annual GDP growth forecast for China to 7.4 percent, and HSBC upgraded its full year forecast to 7.5 percent.
The institutions said they expect the government to continue its policy stance and said the official 7.5-percent full year growth target is likely to be realized.