Industrial profits edge down in Oct

Firms urged to innovate, transform amid slowing economy

China's industrial profits fell 2.1 percent in October from a year earlier, reversing a 0.4 percent growth in September, official data showed on Thursday, another sign of the country's torpid economy.

October's data is the second year-on-year fall this year, after a 0.6 percent slide in August. From January to October, the industrial profit totaled 4.94 trillion yuan ($804 billion), up 6.7 percent from a year earlier, half of the 13.7 percent year-on-year growth recorded for the first 10 months of 2013, according to the data released by the National Bureau of Statistics on Thursday.

"The data shows that industrial firms face tough challenges and great pressure in undertaking transformation and technology upgrading in a slackening economy," Zhang Liqun, a research fellow at the Development Research Center of the State Council, a Beijing-based government think tank, told the Global Times on Thursday.

Overcapacity and oversupply led to falling prices, and the rise of costs further eroded profit margins, he said, noting however the revenues of industrial firms did not fall as dramatically as profits, which indicates an overall stable operation.

Revenues of major industrial firms grew by 7.7 percent in the first 10 months from a year earlier, down 3.4 percentage points from the same period in 2013, and 0.2 percentage points down from the January-September period.

Firms cannot count on the change of monetary policy to make a profit without innovation and transformation, Zhang said.

China's central bank cut the benchmark interest rates unexpectedly on November 21 for the first time in more than two years against the backdrop of a slowing economy.

Annual economic growth lessened to 7.3 percent in the third quarter, the weakest pace in more than five years.

The country will hold its annual Central Economic Work Conference in December which is widely expected to set the tone for the economic goals and priorities for 2015.

Policies and direction on the mixed-ownership reform of the torpid State-owned enterprises, local government financing vehicles, as well as the tax revenue distribution between the central and local governments might be further clarified at the work conference, Zhang Yingjie, research president of China Chengxin International Credit Rating based in Beijing, told the Global Times on Thursday.

China will further lower its growth target for 2015 as it continues to restructure its economy and shift it to a more sustainable path by releasing market power, he said.