BEIJING: The profits of China’s industrial companies grew for the first time in seven months in April, sending positive signals of stabilization in the world’s second-largest economy.
Net earnings of manufacturers totaled 479.5 billion yuan (US$77.3 billion) last month, up 2.6 percent from a year earlier, according to the National Bureau of Statistics.
That reversed a drop of 0.4 percent in March.
He Ping, a researcher at the bureau, said stabilizing production and sales in the manufacturing sector had helped profits rebound.
“The easing policies, including the reduction of interest rates, helped bolster the profits as well,” He said.
“But the negative factors, including insufficient market demand and declining prices, still existed. As a result, cash flows in industrial companies remained tight.”
In April, industrial production rose 5.9 percent, 0.3 percentage points faster than that in March. Sales in the sector gained 0.6 percent, up from the rise of 0.5 percent in the previous month.
“We see more signs of stabilization,” said Wendy Chen, an economist with Nomura.
“The improvement was mainly seen at state-owned enterprises while private enterprises maintained moderate profit growth.”
Earlier data showed the possibility of manufacturing activity rebounding in May. The HSBC Flash China Manufacturing Purchasing Managers’ Index, the earliest available indicator of the industrial sector, landed at 49.1 this month, up from April’s final reading of 48.9, which was a one-year low, according to HSBC and research firm Markit last week.
China also unveiled its “Made in China 2025” vision last week, which highlighted the next stage of its manufacturing sector from plain production to advances in space, e-commerce, green energy and bio-engineering.
The plan is to promote high-technology industry by 2025 and move the economy away from the low-value manufacturing model that has fueled the country’s meteoric rise over the past quarter of a century.
In the first four months of this year, profits of industrial companies amounted to 1.73 trillion yuan, still down 1.3 percent from a year earlier.
