China factory profits up 17.6pc in first seven months

Industrial firms in China reported a 17.6 percent increase in profits year on year during the first seven months of the year, according to data released by the National Bureau of Statistics on Thursday. The combined profits of these firms, which generate at least 20 million yuan annually, reached a total of 4.58 trillion yuan. Profit growth slowed to 17.6 percent for the seven-month period, down from 18.7 percent in the first half of the year.

This deceleration was largely due to rising input costs that squeezed profit margins, despite stable revenue growth, according to Xing Zhaopeng, a senior China strategist at ANZ. Higher prices for raw materials posed a challenge for midstream and downstream manufacturers. However, export-linked, high-tech, and industrial sectors continued to show strong growth, with the computer, communication, and other electronic equipment manufacturing sector experiencing a remarkable 110 percent increase in profit.

The non-ferrous metal smelting, rolling processing sector also saw significant growth, with profits jumping 91.8 percent. Notably, fiber optics, optical cable manufacturing, and communication system equipment manufacturing sectors also posted impressive growth rates, soaring by 468.4 percent, 62.6 percent, and 55 percent, respectively.

Despite the overall slowdown, the bureau statistician, Yu Weining, noted that the global environment remains complex and challenging, with an imbalance between strong supply and weak domestic demand posing a major constraint. The nation's vice finance minister promised to introduce additional fiscal support measures in a timely manner following economic indicators indicating a loss of momentum at the start of the third quarter.