Fall in Chinese industrial profits

An index of the industrial performance of Chinese companies recorded a fifth successive month of decline in profits. The slowdown, which began in 2011 and accelerated at the start of 2012, has now extended into a seventh successive quarter.

A report from the National Bureau of Statistics in Beijing has shown that net income fell by 6.2% (equivalent to 381.2 billion yuan or $60.4 billion). This forms part of a steady decline throughout 2012. The data covers industrial companies with annual income on major businesses of at least 20 million yuan. According to analysts at Bloomberg, part of the reason for the decline has been the fall in earnings coupled with a fall in prices, counterbalanced by a rise in process and a reduced demand for goods. These factors have contributed to the fall in profit. The report has led China’s central bank to inject further funds into the financial system, as the Financial News reports. Earlier in the year the bank implemented monetary easing and cut interest rates. In addition, the bank has lowered lenders’ reserve requirements. In response, CNBC indicates that the Chinese government has sped up approvals of infrastructure projects to help boost investment. The forecast for 2013 remains bleak, especially in terms of lower funding for investment projects.