Chinese officials cautious despite three-year record industrial profits

Oliver Gill
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China Daily Life - Economy
Officials warned that August 2015 was a low base against which to compare industrial profits (Source: Getty)

China’s industrial firms grew profits at the fastest rate in three years during August.

Profits for the month in the world’s second-largest economy grew by 19.5 per cent to 535bn yuan (£62m) according to data released by the country’s National Bureau of Statistics (NBS) – the best monthly growth since August 2013.

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However, Chinese officials were cautious on releasing the results.

He Ping of the NBS warned that despite the growth in profits, China’s traditional industries struggling after being undermined by overcapacity – for example, mining profits fell by 71 per cent.

He also said that the growth was bolstered by a low base experienced in August 2015.

Nevertheless, the results have had a positive impact on year to date aggregate sector performance. Total profits for the first eight months of 2016 increased by 8.4 per cent compared to the same period in 2015. The increase in the first seven months was 6.9 per cent.

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The news comes in the wake of Asian Development Bank nudging up its annual growth forecast for China from 6.5 to 6.6 per cent in 2016 and from 6.3 to 6.4 per cent in 2017.

But analysts at Bank of America Merrill Lynch have recently highlighted a urban housing bubble as problematic for the country.

“Stimulus [measures] may weaken due to a renewed focus on supply-side reform. We expect earnings to come under significant pressure again reasonably soon,” it said.

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