Weakening market demand slumps industrial profits

Profits at China's major industrial companies slumped in August, the National Bureau of Statistics said on Friday, reflecting corporate pain stemming from weakening market demand.

Industrial enterprises with annual revenue of at least 20 million yuan ($2.85 million) saw their total profits slump 17.8 percent from a year earlier in August, NBS data showed, compared to a 4.1 percent year-on-year rise for the month before. 

For the January-August period, China's industrial profits increased 0.5 percent year-on-year, following a 3.6 percent growth in the first seven months. 

NBS statistician Yu Weining said the decline in August profits was mainly due to the high comparison base in the previous year, while industrial profits grew at a slower pace in the first eight months due to the lack of effective market demand and the impact of natural disasters like increased temperatures and floods.

Yu warned of pressures from lukewarm consumer demands and a complicated external environment, saying more efforts should be made to consolidate the foundation for the recovery of industrial profits.

Moving forward, Yu said the country needs to take more steps to foster new growth drivers, actively expand effective demand and further drive equipment upgrades and trade-in deals for consumer goods. 

Among the 41 major industrial sectors surveyed, 29 saw year-on-year growth in their profits in the first eight months, NBS data showed. 

In the first eight months, profits recorded by industrial firms that offer supplies of electricity, heat, gas and water grew by 14.7 percent year-on-year, and profits recorded by manufacturing companies rose by 1.1 percent. Meanwhile, profits recorded by mining firms shrank 9.2 percent. 

Notably, profits at high-tech manufacturing industries surged 10.9 percent in the first eight months, 10.4 percentage points higher than that of the overall industrial profits.

According to a breakdown of the NBS data, State-owned firms saw earnings dip 1.3 percent year-on-year in the first eight months. Foreign firms booked a 6.9 percent rise and private-sector companies recorded a 2.6 percent growth.