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Economy

Economic Watch: China's high-tech manufacturing sector sees better profits

November 28, 2019


Abstract : China's high-tech manufacturing industry saw improving profitability during the first 10 months of the year, reflecting the country's achievement in industrial upgrading and economic restructuring.

BEIJING, Nov. 27 (Xinhua) -- China's high-tech manufacturing industry saw improving profitability during the first 10 months of the year, reflecting the country's achievement in industrial upgrading and economic restructuring.

Profits of China's major high-tech manufacturing companies rose 7.5 percent year on year from January to October, compared with a 6.3-percent growth seen in the first nine months, data from the National Bureau of Statistics (NBS) showed Wednesday.

Equipment manufacturing and strategic emerging sectors also saw their profit growths accelerate during the 10-month period.

Data showed that private and small industrial companies reported stable profit growth during the period, up 5.3 percent and 8.8 percent, respectively.

"China's economy has been transitioning from a phase of rapid growth to one of high-quality development, which has created opportunities for new industries, such as high-tech manufacturing," said Yu Fenghui, an economist and columnist.

Better profitability in such sectors showed that China's strategy of upgrading from low-end manufacturing to high-end industries worked, Yu said.

Buoyed by robust demand from home and abroad, the high-tech manufacturing industry will play a bigger role in driving the growth of the whole manufacturing sector, said Chen Li, an analyst with Chuancai Securities.

PROFITS DECLINE

Profits for the broader industrial companies dropped 2.9 percent year on year during the first 10 months, the statistics bureau's figures showed.

The decline widened from a 2.1-percent fall in the first nine months.

In October, the profits of major industrial firms fell 9.9 percent from a year earlier.

The fall was mainly due to a widening decrease in producer prices for manufactured goods, and slower production and sales growth, said NBS senior statistician Zhu Hong.

The profit decrease was because of slower growth in industrial output, said a research note from Southwest Securities, adding that with recovering market demand, industrial companies are expected to see their profits bottom out in the near future.

Chen Li with Chuancai Securities said the government will strengthen counter-cyclical adjustments and continue with tax and fee cuts, which will help improve the industry's overall profitability.

As China continues to optimize the business environment and open up its market, industrial companies are expected to perform better next year, Yu noted.

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Keyword: profits high-tech manufacturing

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