China industrial profit decline narrows

Major Chinese industrial firms posted a narrower decline in their profits in June, official data showed Friday, supporting expectations that industrial growth will stabilize in the world's second largest economy. Profits of major Chinese industrial companies, or those with annual revenues of above 20 million yuan (3.2 million U.S. dollars), slipped 1.7 percent year on year to 468.2 billion yuan in June, the National Bureau of Statistics (NBS) said in a statement. The decline was narrower than a 5.3-percent year-on-year drop in industrial profits in May. In the first six months, profits of the industrial firms fell 2.2 percent from the same period last year to 2.31 trillion yuan, 0.2 percentage point slower than the decrease in the first five months. The data came after an official with China's industry watchdog projected Wednesday that industrial growth would stabilize and pick up pace in the second half as the government's pro-growth policies gradually took effect. Industrial value-added output rose 10.5 percent year on year in the first half, down from the 11.6-percent increase seen in the first quarter, as the European sovereign debt woes and a cooling property sector weighed on China's economy. There remained lingering uncertainties that may bring fresh shocks to the industrial growth as the foundation of the recovery was still fragile, said Zhu Hongren, chief engineer of the Ministry of Industry and Information Technology. The government has been moving to stimulate economic growth, including cutting interest rates and bank reserve requirement ratios, fast-tracking investment plans and subsidizing the purchase of energy-saving household electrical appliances. In the first six months, state-owned and state-controlled industrial enterprises saw their profits fall 10.9 percent from a year earlier to 690.5 billion yuan, while private companies' profits grew 16.5 percent to 694.7 billion yuan, according to NBS data. During the period, foreign-funded enterprises and those invested by businesses from China's Hong Kong, Macao and Taiwan saw profits dropping 13.4 percent year on year to 522.1 billion yuan. Out of 41 industry categories, 27 reported a year-on-year increase in profits, 13 saw profits falling and one dropped to losses, the data showed. The ferrous metal sector was hit the hardest, with profits slumping by 56.5 percent year on year. The chemical raw materials and product manufacturing industries suffered a 22.5-percent drop in profits. Oil refining, coking and nuclear fuel processing companies saw profits turning into losses. Profits in the power and heat generation sector, however, increased 23.8 percent. Oil and gas exploration industry witnessed a 0.5-percent rise in profits, according to the statement.