Dec. 28 (Bloomberg) -- Chinese industrial companies’ profits surpassed pre-crisis levels in the past three months, underscoring a strengthening economic rebound in response to record fiscal stimulus and credit growth.
Net income rose 7.8 percent in the 11 months through November from the same period a year earlier, to 2.59 trillion yuan ($379 billion), the statistics bureau said today in Beijing.
China’s benchmark stock index rose to its highest level in almost two weeks on optimism earnings will keep accelerating as Premier Wen Jiabao maintains the stimulus measures. Wen yesterday recommitted his government to a “proactive” fiscal stance, “moderately loose” monetary policy and a stable exchange rate that has aided China’s exporters.
“Companies’ profits will continue to improve as China’s recovery gains momentum,” said Lu Ting, an economist at Bank of America-Merrill Lynch in Hong Kong. “Industrial companies are enjoying better price margins and expanding domestic demand.”
The Shanghai Composite Index advanced 1.7 percent to 3,193.70 as of the 11:30 a.m. break in trading local time.
The eleven-month profit figure is the highest on record, statistics bureau data show. Electricity companies’ profits more than tripled as Datang International Power Generation Co. and Huaneng Power International Inc. tapped increased demand.
Growth Rate
China’s economy has accelerated in the past two quarters, growing 8.9 percent in the three months through September from a year earlier. The fourth-quarter figure will be released in January. The nation is poised to overtake Japan as the world’s second-biggest economy next year, according to the International Monetary Fund.
Oil processors swung to an 82 billion yuan profit compared with a loss of more than 120 billion yuan a year earlier. A fuel-pricing system introduced last year guarantees a profit margin for state oil refiners and has encouraged China Petroleum & Chemical Corp. and PetroChina Co. to expand capacity to meet rising demand.
Stimulus spending and a record $1.3 trillion of new loans in the first 11 months of 2009 are driving up demand. China’s economy is leading the recovery in Asia. Japan reported today its biggest gain in industrial output in six months.
Manufacturers reporting higher earnings include China Resources Enterprise Ltd., the Chinese partner of SABMiller Plc, and Beijing Automotive Industry Holding Co. , which is buying technology from General Motors Co.’s Saab unit to speed the development of own-brand models to meet growing domestic demand.
Steel, Mining
Today’s report also showed that the chemical-fiber industry had a 187 percent gain in profit for the first 11 months of 2009 from a year earlier. The steel and mining industries pared declines.
The profits of industrial companies overall recovered throughout the year after a 37 percent slump in the first two months. Sales through November rose 7.1 percent to 47.5 trillion yuan, today’s data showed. Released every three months, the numbers are for businesses with annual sales of more than 5 million yuan in 39 industries, including steel, chemicals, electricity, telecommunications and mining.
On Dec. 25, the statistics bureau said the economy grew 9.6 percent last year, more than the 9 percent initially reported. That narrowed the gap with Japan.
