| China's industrial profit growth accelerates |
BEIJING, Nov. 22 -- Profit growth at Chinese industrial companies accelerated in October for a seventh straight month as steelmakers including Baoshan Iron & Steel Co boosted prices, Bloomberg reported today, citing the National Bureau of Statistics.
Combined net income surged 30.1 percent through October from a year earlier to 1.5 trillion yuan (US$191 billion) after climbing 29.6 percent in the first nine months, the bureau said today. Total sales jumped 26.1 percent to 24.7 trillion yuan in the period.
Profit growth has picked up even as the central bank raised interest rates twice this year to cool an investment boom that threatens to leave China with idle factories. Rising profits may cause spending to rebound as many companies finance capacity expansion from retained earnings.
"It does complicate the tightening a bit since much of the investment is funded through retained earnings," said Ben Simpfendorfer, an economist at Royal Bank of Scotland Plc. "It argues that they'll have to remain vigilant, even though investment has slowed lately."
China's economy, the world's fourth largest, slowed in the third quarter as Premier Wen Jiabao's investment curbs took effect. Growth in fixed-asset investment and industrial production has moderated since June, reflecting tighter rules on land use, higher interest rates and efforts by the central bank to remove funds from the financial system.
Steel industry profits jumped 13.5 percent in the first 10 months after gaining 5.7 percent through September. Average prices of hot-rolled steel sheets rose 6.3 percent in the third quarter after falling in the first half, according to Bloomberg data.
Baoshan, China's biggest steel producer, reported a 42 percent surge in third-quarter profit and reversed three quarters of declines as demand for the metal recovered. Net income rose to 4.7 billion yuan in the three months ended September 30, according to an October 27 announcement.
Higher steel prices translated into rising costs for manufacturers including FAW Car Co, which makes automobiles in China with Toyota Motor Corp and Volkswagen AG. FAW's third- quarter profit fell 7.6 percent to 70.8 million yuan because of rising price of steel sheets, the largest cost in vehicles.
Earnings at coal mining companies increased 17.6 percent in the period, today's release said, the most in at least five months. Yanzhou Coal mining Co, the overseas unit of China's fourth-biggest producer of the fossil fuel, reported a 16.5 percent rise in third-quarter profit, thanks to increased production.
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