China’s industrial sector showed stronger profit growth in November, suggesting the world’s second-largest economy was improving, though policymakers noted growth was too dependent on a rebound in prices for oil products and iron and steel.
Profits in November rose 14.5 percent to 774.6 billion yuan ($111 billion), the National Bureau of Statistics (NBS) said in a statement on Tuesday. Profits in October rose 9.8 percent.
Industrial profits rose 9.4 percent in the first 11 months from the same period a year earlier, up from an 8.6 percent growth rate in the first ten months of the year.
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“Industrial profits rose relatively fast due to a lower base last year, and the growth was overly reliant on a price rebound in raw material industries such as oil refining, and iron and steel,” said He Ping, an NBS official, in a note accompanying the data.
Profits in manufacturing rose 13.7 percent for January-November from the same period a year earlier, while profits in the mining sector fell 36.2 percent.
China’s producer prices rose at the fastest pace in more than five years in November as prices of coal, steel and other building materials soared, boosting industrial profits and giving firms more cash flow to pay off mountains of debt.
Chinese industrial firms’ liabilities at the end of November were 5.6 percent higher than at the same point last year and rose slower than assets.
The data covers large enterprises with annual revenues of more than 20 million yuan from their main operations.
China’s industrial profits have rebounded strongly this year after falling last year, boosted by a recovery in commodity prices as supply tightened due to a capacity reduction drive and an infrastructure boom.
China’s industrial output is likely to grow around 6 percent in 2017, just like it did this year, a state-run newspaper quoted Chinese industry minister Miao Wei as saying on Monday.
($1 = 6.9494 yuan)