Industrial earnings bounce back in March

Companies included in NBS statistics each have more than 20 million yuan in revenue from their main businesses.

Among them, State-owned enterprises' profits were down 12.4 percent year-on-year due to shrinking revenue in upstream industries, while the profits of overseas-funded companies dropped 12.6 percent year-on-year due to weak global demand and an appreciating yuan.

However, private and collectively owned enterprises managed to achieve an overall growth in profits of about 20 percent.

Continued incentives for private business and reduced investment support to SOEs are the reasons for the varying performance.

Among the 41 surveyed industries, 27 of them, including the oil and gas, farm and sideline products, automobiles, and power industries, reported an increase in profits.

Another 11 industries, including the chemicals and ferrous metals industries, saw their profits decline.

A report by the Agricultural Bank of China Ltd said processing industries in the middle of the industrial chain are facing heavier burdens, as rising costs cannot be passed on to downstream industries due to sluggish market demand.

"Although the situation cannot be reversed at present, it is unlikely that profits will drop as dramatically as during the 2009 crisis, because the main cause of the decline is now rising costs rather than an economic downturn," said the report.

Liu Tiejun, a macroeconomics analyst with Haitong Securities, said rebounding profits in March had sent a positive signal, and industrial profits will turn positive in the second half of the year as the effect of incentive policies is increasingly felt.

Liu predicted year-round industrial profits of around 5 percent.

weitian@chinadaily.com.cn