China's industrial profits up 21.2 pct in first 7 months

China’s major industrial firms posted steady profit growth in the first seven months of the year, official data showed yesterday.

From January to July, industrial companies with annual revenue over 20 million yuan (US$3 million) reported total profits of above 4.2 trillion yuan, up 21.2 percent from the same period in 2016, the National Bureau of Statistics said in a statement.

The growth rate was slightly below the 22 percent in January-June but much faster than the 8.5 percent increase in 2016.

In July, profits of major industrial firms rose 16.5 percent year on year, below the 19.1 percent rate in June.

Bureau statistician He Ping attributed the slower growth in profit to high temperatures in July when a number of factories halted production.

However, industrial performance has kept improving and profit grew rapidly thanks to ongoing supply-side structural reform, He added.

From January to July, profit in the equipment manufacturing sector surged 18.1 percent year on year to over 3.7 trillion yuan, and in the mining industry jumped 790 percent to 279.6 billion yuan.

The industrial sector, which accounts for about one-third of China’s GDP, started to pick up last year after a bad 2015.

There are also signs pointing to a stabilizing industrial sector.

In July, the costs of major industrial firms fell, He said. For each 100 yuan of revenue, companies had to spend 93.12 yuan, down from 93.41 yuan for the same period last year, data showed.

The companies also reported healthier balance sheets. The average collection period for accounts receivable fell from 38.1 days a year earlier to 37.1 days by the end of July.

The corporate leverage ratio continued to decline. Debt-asset ratios of major industrial firms shed 0.7 percentage points year on year to 55.8 percent by the end of July.

The profit rate of major industrial companies rose by 0.33 percentage points to 5.97 percent in July.

He also highlighted the strong performance of state-owned major industrial companies whose profit surged 34.2 percent in July year on year. In June, their profit added 20.7 percent, the bureau said.

The data is the latest in economic indicators that showed China’s economy is steadily stabilizing and improving, prompting the International Monetary Fund to raise GDP outlook for the country.