Growth appears sustainable, experts say
Profits of China's major industrial companies rose 11.1 percent year-on-year in March, which experts characterized as a sign of recovery for the sector.
Industrial profits reached 561.24 billion yuan ($86.56 billion) in March, data issued by the National Bureau of Statistics (NBS) showed Wednesday.
In the first quarter of 2016, profits of major industrial companies stood at 1.34 trillion yuan, an increase of 7.4 percent from the prior period and improving from a 4.8 percent rise in the January-February period, said the NBS.
Major industrial companies are those whose annual revenue exceeds 20 million yuan.
The first-quarter growth was driven by computer, communications and electronic equipment companies and chemical companies, which reported 35.9 percent and 20.8 percent gains, the NBS data showed.
But profits for coal miners fell 92.6 percent year-on-year, and earnings of ferrous metal smelting and rolling companies posted a drop of 15.8 percent, noted the bureau.
"Although high-technology sectors contributed a lot to the profit growth, sectors like mining and energy continued to struggle, which reflected that the industrial sector is going through a structural adjustment," Liu Xuezhi, a senior analyst at Bank of Communications, told the Global Times Wednesday.
The gain this year also reflects a low base of comparison, said Liu.
He Ping, an NBS expert, attributed the pickup in March to the improving domestic economy, but noted that "it was not a balanced and stable recovery," according to a separate statement on the NBS website.
Sluggish demand, large inventories and financing difficulties still trouble the sector, He noted.
In the first three months, private industrial companies performed strongly, with their profits rising 7.7 percent year-on-year to 485.05 billion yuan. Profits of State-owned enterprises (SOE) dropped 5.7 percent year-on-year during the same period, according to the NBS.
The weakness at SOEs is temporary because they are being affected by some sluggish industries to which they are closely related, such as mining, Guo Lei, chief economist with Founder Securities, told the Global Times Wednesday.
"Profits are on the upswing in the industrial sector and the gains will be sustainable," he said.
