Profits in China’s industrial sector rose at the fastest pace in three years as the world’s second-biggest economy showed more signs of stabilizing, though some private forecasters say the improvement may be more fleeting than real.
Profits of industrial firms in August jumped 19.5% from a year earlier to 534.8 billion yuan ($80 billion), the National Bureau of Statistics said on Tuesday. That was the largest increase since August 2013, Reuters reported.
China’s economy grew 6.9% last year, the slowest in 25 years, as global demand ebbed. Following billions of dollars in government spending and a property boom in the country’s top-tier cities, official data in recent months are starting to point to some stabilization in the economy.
Steel and oil refining helped drive the jump in profits last month, the statistics bureau said, in line with the view that state infrastructure projects and a ramp-up in construction are lifting the basic materials sectors and the overall economy.
In August, the volume of rail freight rose for the first time since December 2013, up 1% from a year earlier, according to data released by NBS on Tuesday.
“Gross domestic product growth in the third quarter could be faster than the first or second, in the range of 6.7 to 6.8%,” said Liao Qun, chief economist at Citic Bank International.
Trade Deficit Widens
China’s trade deficit in services widened to $25.4 billion in August from $22.5 billion in July, the foreign exchange regulator said on Tuesday.
August’s deficit was largely due to a $23.2 billion spending gap between the Chinese, who splurge more abroad than foreign tourists in China, data from the State Administration of Foreign Exchange showed.
In the January-August period, the trade deficit in services was $164.4 billion.
Helpful Plan
Former World Bank chief economist Justin Lin Yifu said the government’s industrial development plan has helped bring the Chinese economy to where it is today, and that such policies should continue.
Zhang Weiying, a professor at Peking University’s prestigious Guanghua School of Management, said he believes the success of the Chinese economy is primarily due to the opening-up that let the market play a larger role, adding that China should scrap industrial policies and let the market play an even larger role.
“There is nothing new in their debate, but it’s again in the spotlight because of China’s economic conditions and the public’s unease over their future,” said Tian Yun, director of the China Society of Macroeconomics Research Center, told the Global Times on Monday.
