China's Jan-Aug industrial profit up 55%
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Growth of industrial profits in China slowed further in the first eight months, in an indication that the government's measures to cut emissions are taking effect.
From January to August, profits of Chinese industrial enterprises rose 55 percent year on year, down from the increase of 81.6 percent in the first five months, the previous period over which the National Bureau of Statistics (NBS) conducted the survey, the NBS announced Monday.
The NBS figures showed that from January to August, profits of industrial enterprises -- those with annual sales exceeding 5 million yuan (746,194 U.S. dollars) each -- totaled 2.6 trillion yuan.
During the period, revenues of industrial firms totalled 43.1 trillion yuan, up 33.4 percent from a year earlier, but the growth rate declined by 4.8 percentage points from the January-May period.
The growth in profits saw an even sharper fall from the first two months, the first nationwide survey period of 2010, when industrial profits climbed by 119 percent from January-February last year.
Heavy industries saw the biggest slowdown in profits.
In the ferrous metals smelting and processing sector, the profits growth rate fell to 99.7 percent in the year to August, down from 3,290 percent for the first five months, according to the NBS.
For smelters and processors of non-ferrous metals, the profits rose by 130 percent, much slower than the 330 percent for the January-May period.
Firms in the sector of generating and providing electricity and heating power made 120 percent more profits than the same period last year, but the growth rate was down from the previous 260 percent.
Experts said the slowdown was a sign that a series of government moves to improve the country's energy efficiency, measured by consumption of energy relative to economic output, were taking effect.
Zhuang Jian, senior economist at the Asian Development Bank, told Xinhua that high energy-intensive firms were concentrated in the heavy industries, which accounted for a very high proportion of industrial profits.
He said the measures had affected the profitability of industrial enterprises, especially the energy-intensive firms.
Earlier this month, China's top economic planner, the National Development and Reform Commission (NDRC), took a tougher stance when it issued warnings to 30 provinces, autonomous regions and municipalities to take concrete actions to improve energy efficiency.
In May, Premier Wen Jiabao said accountability mechanisms would be enforced in energy efficiency work, which meant local leaders could be punished or even removed from office for failures to fulfill the policy.
In August, the NDRC abolished the preferential electricity rates granted by 22 provincial governments to high energy-intensive businesses.
However, China is still under heavy pressure to reach its goal of improving energy efficiency by 20 percent from 2005 to 2010.
The NBS said in July that consumption of energy relative to economic output rose in the first half by 0.09 percent from the same period last year after the government announced it had fallen by 15.6 percent from 2005 to 2009.
Zhuang expected China's industrial profits, especially heavy industries, to continue declining this year as government measures were implemented more stringently.
He also said that even with slower profits growth, a 55-percent increase was still a highly profitable figure, but this should not be taken as representative of industrial growth nationally.
"The carbon emissions cutting campaign should have taken a heavier toll on small and medium-sized enterprises, which were not included in this survey but were more cost-sensitive," Zhuang said.
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