China’s 474 key state-owned enterprises (SOEs) reported a
combined 42.1 percent jump in profit in the first seven months of
the year, the State-owned Assets Supervision and Administration
Commission announced yesterday.
The growth rate was 11.7 percentage points higher than in the
first quarter and 3.5 points over the figure at the half. Combined
total profit was 342 billion yuan (US$41.3 billion).
Industrial output of the key SOEs surged 27.5 percent during
January-July period to reach 2.6 trillion yuan (US$314 billion).
Most of the growth was contributed by enterprises in the
metallurgy, coal, machinery and petroleum sectors.
The 474 key SOEs are mostly flagships of their industries,
larger and with greater profitability than their non-key
counterparts.
By the end of July, 72 of the 474 enterprises were still
recording losses, but they had shrunk 72.4 percent
year-on-year.
SOEs in the petrochemicals, power and coal sectors posted the
strongest profit growth, fueled by the price rally in energy
products amid steady growth in the overall economy. Coal firms saw
profit soar150 percent in the first seven months, backed by strong
domestic demand.
The operating environment also helped to bring transportation
enterprises back into the black. They realized a combined profit of
22.8 billion yuan (US$2.8 billion) in profit in the January-July
period, compared with 2.4 billion yuan (US$283.8 million) in losses
in the same period a year ago.
Meanwhile, enterprises in the rail and electronics sectors also
managed to climb out of the red.
However, some analysts are saying that this staggering profit
growth may slow in the second half of the year as state
macroeconomic controls continue to have a harnessing effect.
The authorities have been applying the brakes to economic growth
since the second half of 2003, with such measures as higher reserve
requirements for banks and tighter credit supply, especially in
overheating sectors such as steel.
Already, key auto SOEs saw profit slip 10 percent year-on-year
in the first seven months, compared to a 3 percent increase in the
first six months.
But there are exceptions to this projected trend. A newly
released report by Tiantong Securities predicts that coal profits
will continue to stack up in the foreseeable future, in spite of
macroeconomic curbs.
Energy shortages are expected to remain a bottleneck. Overall
economic growth is expected to stay on course, which means demand
for energy will continue to rise, pulling coal enterprise profit up
along with it.
(China Daily August 31, 2004)