China's 2017 industrial profits post fastest growth in 6 years

Growth in China's manufacturing sector slowed slightly in December.

BEIJING: Profits for China's industrial firms rose at a slower pace in December than the previous month, data showed on Friday, but clocked their fastest annual increase in six years as cost cutting and a construction boom helped businesses in 2017.

For the full year, profits surged 21.0 percent to 7.519 trillion yuan in 2017, the fastest pace since the 25.4 percent expansion in 2011, and accelerating from 2016's 8.5 percent increase, the National Bureau of Statistics (NBS) said on its website.

The fast growth in 2017's profits is largely due to the deepening of cuts in over-capacity and costs reduction efforts, He Ping of the statistics bureau said in a statement along with the data release.

Profits in December rose 10.8 percent in December from a year ago to 824.16 billion yuan ($130.43 billion), slowing from November's 14.9 percent gain, as winter pollution curbs weighed on activity.

China's producer prices rose at their slowest pace in 13 months in December, as the government's war against winter smog dented factory demand for raw materials in the month.

While the industrial sector has enjoyed a year-long construction boom, a government-led battle to clean polluted air has forced steel makers in Northeastern China to curtail output although factories elsewhere may have ramped up production to gain market share.

China's Ministry of Environmental Protection published a notice this month, saying it would impose "special emissions restrictions" on enterprises in major industrial sectors in northern parts later this year.

Despite some traders replenishing steel stockpiles ahead of the Lunar New Year holiday, appetite has diminished due to concerns about demand.

China's one-week Lunar New Year holiday starts on Feb. 15.

Chinese steel prices fell on Friday, as demand was tepid in winter months, weighing down raw materials.

The earnings data by sector, however, highlights the uneven nature of profit growth.

Mining industry profits rose 261.6 percent from a year earlier in 2017, while manufacturing profits were up 18.2 percent.

Profits at China's state-owned industrial firms rose 45.1 percent in 2017 from the year before, slowing from a 46.2 percent increase in January-November.

China posted its 2017 gross domestic product of 6.9 percent growth this month, logging its first annual acceleration in growth in seven years, defying concerns that government's intensifying crackdown on property market and credit would hurt expansion.

Chinese industrial firms' liabilities in 2017 were 5.7 percent higher than at the same point last year at 62.3 trillion yuan. - Reuters
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