Business

China Jan-Feb industrial profits surge 32%

BEIJING Profits of Chinese industrial firms surged almost 32 per cent in the first two months of this year - the fastest pace in nearly six years - as prices of commodities from coal to iron ore raced higher.

Stronger earnings could give a further boost to fixed-asset investment, which quickened early in the year, and give China's "smokestack" industries more cash flow to start whittling away at a mountain of debt - a top government priority this year.

Total industrial profits over the first two months of the year were 1.01 trillion yuan (S$204 billion), the National Bureau of Statistics said in a statement yesterday.

The increase was mostly due to faster growth in prices of coal, steel and crude oil, said Mr He Ping, a statistics bureau official, in a note accompanying the statement.

Robust import volumes, however, also suggest a pick-up in economic activity in recent months.

The pace of profit growth picked up sharply from a 2.3 per cent increase in December, and was the fastest on a year-to-date basis since January-March 2011 profits rose 32 per cent.

Industrial profits rose 8.5 per cent last year, snapping back from a slight drop in 2015, largely due to a sharp increase in prices of coal, as well as raw materials, such as iron ore, which were needed to help feed a construction boom.

China's economy got off to a strong start this year, supported by robust bank lending, a government infrastructure spree and a much-needed resurgence in private investment.

The government boosted spending at the start of the year, with outlays rising 17.4 per cent in January-February, compared to 12 per cent growth over the same period in 2016.

Industrial firms stand to benefit from fixed-asset investment that expanded more than expected in the first two months of the year, including a 27.3 per cent increase in infrastructure spending. - REUTERS

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