Nov. 27 (Bloomberg) -- Chinese industrial companies’ profit gains surged in October and turned positive for the year as factory output accelerated and export growth picked up following a seven-quarter economic slowdown.
Net income gained 20.5 percent from a year earlier to 500.1 billion yuan ($80.4 billion), the National Bureau of Statistics said today in Beijing. Profits in September rose 7.8 percent, the first gain in six months.
The data build on signs of a growth recovery in the world’s second-biggest economy, with industrial production and overseas shipments both rising last month by the most since May. The gains reduce the impetus for the new Communist Party leadership headed by Xi Jinping and Li Keqiang to build on policy stimulus including interest-rate cuts in June and July.
“The improved industrial profitability further confirms that the Chinese economy is stabilizing and gaining growth momentum,” said Ding Shuang, senior economist for China at Citigroup Inc. in Hong Kong, who previously worked at the country’s central bank. “The profit number, together with other economic indicators, shows there is no need for the government to launch new easing policies.”
Citigroup raised its 2013 GDP growth forecast for China to 7.8 percent from a previous estimate of 7.6 percent, according to a research report yesterday.
China’s National Development and Reform Commission, the top economic-planning agency, yesterday posted approvals on its website for three projects with a total value of 75.2 billion yuan: subway lines in the cities of Fuzhou and Urumqi and a railway linking Fuzhou with the Pingtan experimental zone in Fujian province.
Most large- and medium-sized Chinese steel mills reversed losses in October, the official Xinhua News Agency reported on Nov. 25, citing Liu Zhenjiang, vice president of the China Iron & Steel Association. Baoshan Iron & Steel Co., the nation’s biggest publicly traded mill, said on Nov. 12 that it would raise prices for most cold-rolled products for December delivery, the first increase for three months.
Industrial companies’ profits in the first 10 months of the year rose 0.5 percent to 4 trillion yuan, according to today’s statement. That compares with a 1.8 percent drop in the first nine months of 2012 and a 25.3 percent gain in the January-October period in 2011. The government began reporting monthly year-over-year profit changes in October 2011.
The Shanghai Composite Index fell 0.8 percent as of 2:04 p.m. local time. It’s down about 16 percent in the past year.
Revenue for industrial companies in the first 10 months increased 10.3 percent from a year earlier to 73.7 trillion yuan, today’s statistics bureau report showed. Sales rose 29.1 percent in the January-October period of 2011.
A manufacturing gauge last week showed the first expansion in 13 months for November, according to a preliminary reading from HSBC Holdings Plc and Markit Economics.
Li, named the No. 2 party official this month and set to succeed Wen Jiabao as premier in March, said last week that the nation must boost consumer spending to sustain expansion and cope with a slowdown in the global economy.
China’s economy expanded 7.4 percent in the third quarter from a year earlier, the slowest pace in three years. Analysts forecast a rebound in the October-December period to 7.7 percent, based on the median estimate in a Bloomberg News survey conducted Nov. 14-19.
Among 41 industries covered by the statistics bureau data, 27 reported profits rose in the January-October period from a year earlier, including 9 percent growth in the auto industry and gains of 57.5 percent in power-company earnings.
Thirteen industries reported a drop in profits, including oil and gas exploration, whose earnings fell 3.2 percent. The only industry to show losses in the first 10 months was petrochemicals, coking and nuclear-fuel processing, the bureau said.
To contact Bloomberg News staff on this story: Xin Zhou in Beijing at email@example.com
To contact the editor responsible for this story: Scott Lanman at firstname.lastname@example.org