Industrial profits continue strong performance

Industrial profits maintained strong growth momentum in November, capping a remarkable turnaround for the year

Major industrial companies, those with annual revenues of more than 20 million yuan ($3.18 million), saw profits surge 22.8 percent year-on-year to reach 638.5 billion yuan last month, the National Bureau of Statistics said on Thursday.

The growth outstripped the 20.5 percent recorded in October and the 7.8 percent in September.

The closing months of the year saw a strong rebound.

In the first 11 months of the year, profits climbed 3 percent from a year earlier to 4.66 trillion yuan. They only registered a 0.5 percent increase in the January-October period and declined 1.8 percent in the January-September period, the bureau said.

Output from January to November grew 10 percent, and this is the target set for next year by the Ministry of Industry and Information Technology.

The industrial sector may contribute more than 40 percent to economic growth, said Miao Wei, minister for industry and information technology.

In 2011, the total net income of the industrial sector was 5.45 trillion yuan.

The focus will also be on quality and efficiency for next year, the minister said.

"The foundation of a recovery in industrial production has not yet been consolidated, and enterprises still encounter difficulties," he said.

More measures will be taken next year to maintain industrial growth, including innovation, brand upgrading and encouraging private capital into industry, according to Miao.

Pan Jiancheng, deputy director of the China Economic Monitoring and Analysis Center under the statistics bureau, said the success of the closing months of this year, "a marvelous achievement'', will be carried over to next.

The purchasing managers' index, a gauge of factory output, increased to 50.9 in December, a 14-month high.

The private sector in manufacturing saw profits up 18 percent year-on-year in the first 11 months. Both State-owned companies and overseas-funded enterprises witnessed profit drops of more than 6 percent during that period.

The data, together with other indicators, show that the economy is gaining steam after slowing for seven consecutive quarters due to weak global demand and government curbs on the property sector.

The survey covered 41 specific sectors and 30 saw growing increases in net income, while 10 experienced slower profit growth. Oil, coking and nuclear fuel suffered losses during the 11 months.

Profits for chemical raw materials and products were down by 10.1 percent in the past 11 months, which was a result of overcapacity of manufacturers and an oversupply in the market, said Zhu Ye, a manager with Alchemist, a Hong Kong-registered trading company specializing in chemical products.

"A main reason was because of the decreased overseas orders," said Zhu, expecting that the sector is likely to experience a price-adjusting period in the coming months.

Mao Chuanfeng, deputy general manager of Jiaxing Niandai Instant Frozen Food Co in Zhejiang province, said he has not yet seen any profit rebound.

"The costs have risen so rapidly. The largest cost was from logistics. Combined with the increasing raw material prices, and rising labor costs which are at least up 15 percent this year, the profit margin is significantly slashed," he added.

Pan predicted that next year's global environment may remain unfavorable to the industrial development, and the problems from excessive production capacity will remain.

The resource and energy sector, mainly controlled by State-owned enterprises, may have a relatively slower recovery, Pan said.