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Profit growth in Chinas industrial firms slowed during thefirstseven months of the year, due to the centralgovernmentsmacro-regulation measures to cool down theeconomy.Profits made byindustrial companies grew 39.7 per centduring the January-Julyperiod compared with the same period a yearago, the NationalBureau of Statistics said yesterday.The growthrate was 1.9percentage points lower than in the first sixmonths.During theseven months, industrial firms handed in 483.6billi
on yuan(US$58.3 billion) of taxes to the State, an increase of22 per centfrom a year ago, the bureau said.Net loss bymoney-losing firms was76.2 billion yuan (US$9.2 billion), up 7.4per cent.The slowerprofit growth suggests the central governmentsmacro-regulationmeasures are working, said Zhang Liqun, a seniorresearcher withthe State Council Development Research Centre.Chinahas taken araft of measures since the second half of last year tocool downthe economy. The measures included raising bankreserverequirements three times and curbing unwanted fixedassetinvestment projects.The measures should have a great impactoncompanies profit growth, he said.Niu Li, a senior economistwiththe State Information Centre, said a decline in fixedassetinvestment growth due to the macro-regulation measuresresulted ina drop in overall demand, which had an impact on thecompaniesprofit.A price drop in raw materials also led to a dropin thecompanies profit growth, he said.Profits earned by thesteelindustry, a sector targeted by the government in its drivetoreduce investment, rose 71.2 per cent during the firstsevenmonths, 9.2 percentage points lower than that in the firstsixmonths, the statistics bureau said.Profits made in thenon-ferrousmetal industry rose year-on-year by 91.5 per cent duringtheperiod. The growth rate was 14.1 percentage points lower thanthefirst six months.The profit growth was still in a goodsituation,Niu said.However, the government should be alert to arebound inboth fixed asset investment and raw material prices,hesaid.Chinas fixed asset investment showed a strongerimprovementin July, earlier figures indicated.But Zhang saidfigures in Julyalone could not indicate fixed asset investment hadbecome stable.We need to observe the figures for the next fewmonths.Im stillworrying the fixed asset investment growth mightdecline too much,because this would have a big impact on theeconomic growth, hesaid.The government wants to bring economicgrowth down from thecurrent levelserehwmany resources such as oilhave beenconstrained, but needs it to stay above 7 per cent togenerateenough jobs.Chinas second quarter gross domestic product(GDP)rose a year-on-year 9.6 per cent. It rose 9.8 per cent forthefirst quarter.Statistics bureau spokesman Zheng Jingping saidtheoverall performance of the national economy was good.Thenationaleconomy retained its stability and fast growth, theeconomicefficiency was improved continuously... residents incomeroseobviously, he said.The uncertainties and unhealthyfactorsexisting in economic performance have also been put underinitialcontrol, Zheng said.However, the government should be awareat thesame time that those prominent problems existing in theeconomyhave not been fundamentally rooted out, he said.The energyandtransportation bottlenecks and rapid growth in fixedassetinvestments in some sectors are still troubling, hesaid.YuwaHedrick-Wong, an economic advisor of the paymentssolutions companyMasterCard Internationals Asia-Pacific region,said the Chineseeconomy would continue to develop stably in thecoming months.Thegrowth in Chinas economy would reduce from 11 percent to 9 percent, shifting from acceleration to cruising, hesaid.(ChinaDaily)
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