Miners move coal to a transport vehicle in Huaibei, Anhui province, in December 2015. Profits of Chinese industrial companies spiked 31.5% year-on-year in the first two months of 2017.
Chinese industrial companies’ year-on-year profits surged in the first two months of 2017, the National Bureau of Statistic (NBS) figures showed Monday.
Profits of Chinese industrial firms jumped 31.5% in the first two months year-on-year, picking up sharply from an 8.5% year-on-year increase in 2016 and a 2.3% year-on-year increase in December, largely due to rising prices in industries like coal mining, petroleum and natural gas.
Total industrial profits amounted to 1.02 trillion yuan ($148 billion) in the first two months, while industrial firms’ operational revenue growth also accelerated to 13.7% year-on-year, versus a 4.9% increase in 2016, official data showed.
China’s economy got off to a good start in 2017 on better-than-expected economic data. Urban fixed-asset investment grew 8.9% year-on-year, and industrial output gained 6.3% in the first two months of 2017.
Improvement in profits was mainly enjoyed by so-called upstream industries, or those that process raw materials. Most of these are state-owned enterprises (SOEs) specializing in coal mining and dressing, ferrous metals, petroleum and natural gas. Private firms’ recovery underperformed by comparison.
Industrial profits of SOEs grew 100.2% year-on-year, compared with a combined 14.9% increase in private-sector firms during the first two months of the year.
An overall improvement in industrial profits indicated a strong recovery of profitability and cash flow, China International Capital Corp. said in a research note published on Monday.
However, investment by private companies will be dampened if their gains are squeezed by SOEs, which will create a hurdle for the overall recovery of profitability of industrial firms, analysts said.