BEIJING: Chinese industrial profits dropped 4.2 percent to 676.12 billion yuan (70.00 billion pounds), official data showed on Saturday, the biggest annual decline since August 2012 as the economy hit major unexpected headwinds in the second half.
Despite last month’s drop, profits for January-November were 5.3 percent higher than in the first 11 months of 2013, according to the National Bureau of Statistics (NBS) data.
The NBS attributed November’s profit drop to declining sales and a long-running slide in producer pricing power.Increasing price falls shrank the space for profit,” the agency said.It said the impact of prices for coal, oil and basic materials falling to their lowest levels in years “was extremely clear”.
As the NBS analysis suggested, the net slide in industrial profits was driven primarily by weakness in coal mining, and oil and gas industries, where November profits tumbled from a year earlier by 44.4 percent and 13.2 percent respectively.
Oil, coking coal and nuclear fuel processing industries saw their profits slide by 34.2 percent, according to the data.
On the upside, Chinese technology industries saw profits grow sharply last month. Telecommunications firms saw a 20.7 percent increase, electronics and machinery grew 15.1 percent and automobile manufacturers enjoyed a 16.7 percent gain.
This suggests that on the one hand, in the context of weak investment demand, stable consumption demand provided a certain degree of support; on the other hand, promoting industry restructuring is having a positive effect on efficiency,” the NBS analysis said.
However, the unbalanced nature of the performance highlights a quandary regulators face. They want to restructure the Chinese economy away from credit- and energy-intensive heavy industries toward lightweight technology products and services, yet they must also avoid causing a crisis in the financial system.
