China January-February Factory Profits Rise 17.2% as Recovery Picks Up

A welder works at Sulzer AG's factory in Shanghai, China.
Bloomberg | Getty Images
A welder works at Sulzer AG's factory in Shanghai, China.

China's industrial profits grew 17.2 percent in the first two months of this year from a year ago, official data showed on Thursday, adding to signs that a burgeoning macro economic recovery is being felt across the corporate sector.

"The industrial profit figure in the first two months extended the recovery trend starting from the fourth quarter of last year," said He Ping, an official at the National Bureau of Statistics (NBS) in a statement alongside the data on Thursday.

Chinese industrial firms made total profits of 709.2 billion yuan ($114.13 billion) in the first two months, the National Bureau of Statistics said in a statement on its website,

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Profit growth began showing signs of resurgence in December, gaining 17.3 percent year on year. That followed several tepid months that restrained overall profit growth to a modest 5.3 percent year on year in 2012 to a total of 5.6 trillion yuan.

Industrial profits figures follow a raft of other indicators which point to a steady, albeit mild recovery in the world's second-largest economy, ranging from exports to industrial output and investment.

Among 41 sectors surveyed by the NBS, 30 reported rising profits in the first two months, led by a 150 percent surge for power and heating suppliers and a 170 percent jump for steel companies.

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Firms in the computing and telecommunications sector saw the next strongest growth at 89 percent, followed by tobacco industry growth of 21.3 percent and a rise of 19.8 percent for firms in the automobile sector.

Petroleum refiners, coking and nuclear processors swung into profit in the first two months compared with losses in the same period of last year, the statement said.

It added that power, steel and petroleum refining contributed more than 50 percent of the total industrial profit growth in the first two months of 2013.

On the downside, profits of the petroleum and natural gas extraction industry fell 4.5 percent during the same period.

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China's economy has snapped out of a seven-quarter long slowdown and started to pick up from the last quarter of 2012, as it regains internal strength on the back of Beijing's pro-growth policies. Annual economic growth slowed to 7.8 percent last year, the weakest showing since 1999.

The HSBC flash purchasing managers index, the earliest indicator of China's industrial sector, showed that factory sector activities quickened in March after a holiday dip, pointing to solid first-quarter growth across the world's second-largest economy.