China's industrial profits rise 28%

Chinese industrial companies’ profits rose 28.2 per cent in the first eight months of 2011 from a year earlier, aiding the expansion of the world’s second-biggest economy.

Net income climbed to 3.2 trillion yuan ($500 billion), the National Bureau of Statistics said on its website on Tuesday. The rise compared with a 28.3 per cent increase from January through July.

Rising profits may help support investment and sustain growth as the world’s largest exporting nation faces weakening demand because of Europe’s debt crisis and a faltering US recovery. The International Monetary Fund forecasts that China’s economy will expand 9.5 per cent this year, lower than a June estimate of 9.6 per cent.

“Profit growth is likely to slow down going forward, given the weakening growth momentum,” said Zhang Zhiwei, chief China economist at Nomura Holdings Inc in Hong Kong. Decreased overseas demand for Chinese products and government measures to cool the property market will weigh on the economy, he said.

The bureau’s profit data cover companies with annual core revenue of at least 20 million yuan in 39 industries, including oil and gas exploration, transportation equipment manufacturing, telecommunications and power generation.

Industrial companies’ revenue rose 29.9 per cent to 53.2 trillion yuan in the eight months through August, according to on Tuesday’s statement. Revenue was 45.9 trillion yuan for the first seven months of this year.

Baoshan Iron & Steel Co, China’s biggest publicly traded steel maker, said last month that its first-half profit dropped 37 per cent because of slowing demand from auto makers and rising prices of iron ore and coal.