Sound industrial profits growth thanks to supply-side reforms

An industrial robot at the Sinomach booth at the 2018 International New Energy, Energy-saving, and Intelligent Automotive Exhibition in Guangzhou, Guangdong province, July 29, 2018. [Photo/VCG]

China's industrial profits grew 17.2 percent in the first half, rising 0.7 percentage points than that of the Jan-May period, according to the National Bureau of Statistics (NBS). Industrial profits rose 20 percent in June, down 1.1 percent from that of May.

The sound industrial profits in H1 can be attributed to the supply-side reforms of the country, said NBS statistician He Ping. In the first six months, costs and expenses dropped 0.4 yuan to 92.57 yuan ($13.55) of every 100 yuan of industrial operational incomes on a yearly basis.

Assets liability ratio also decreased 0.4 percentage points to 56.6 percent by the end of June. The liability ratio of State holding enterprises fell 1.2 percentage points to 59.6 percent during the same period, indicating a better deleveraging effect. 

Industries such as petroleum and gas extraction, and ferrous metal smelting and calendering saw profits skyrocketing at 310 and 110 percent in the first half. Nonmetal mineral products and manufacturing of chemical materials and chemicals industries also witnessed profits jumping 44.1 and 29.4 percent, respectively.

While the profits of the electricity, heat production and supply industry rose 27.4 percent during the same period. All the above five industries contributed 67 percent of the country's industrial projects during the Jan to June period, said NBS.

The rise in price maintained the industrial profits despite of a slowing down industrial production growth in June, said He. The producer price index (PPI), which measures costs for goods at the factory gate, was up 4.7 percent in June, 0.6 percentage points higher than that of May.

The Input Price Index (IPI) rebounded 5.1 percent during the same period, a 0.8 percentage points higher than that of May. "Price increase in June boomed more profits growth than that of May," the statistician said.