Industrial profits rebound in March

Thanks to robust profit growth in information technology and the automotive industry, China's industrial profits in March rebounded, though many industries are still slumping.

Profit generated from major industrial enterprises with an annual revenue of more than 20 million yuan ($3.2 million) reported a 10.7 percent year-on-year growth in March, according to the National Bureau of Statistics on Sunday, a strong rebound from the 9.4 percent growth in January and February.

March's figure pulled the first-quarter industrial profits up to 1.29 trillion yuan, up 10.1 percent from a year earlier. However, the profit was concentrated in a few industries, while most industries' profit grew little or even declined.

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Five industries - automotive, power generation and supply, electrical and mechanical machinery, nonferrous metals and information technology products - contributed nearly 80 percent of the 41 industrial sectors' total profit, the NBS said.

For example, the information technology product sector's profit surged strongly from the first two months' 14.1 percent year-on-year loss to 63.42 percent growth in March, pulling overall industries across all sectors up by 3.3 percentage points.

In absolute terms, the automotive and power industries contributed the most profit.

The automotive industry's strong profit was driven by robust demand, as car sales in the first quarter grew 9.2 percent over a year ago, according to the China Association of Automobile Manufacturers.

Accelerated growth in the power industry's profit was attributed to the dropping price of coal, the most important source for power generation in China.

He Ping, an economist with the NBS, said another reason for the strong profit rebound in March was last year's low totals. Profits in March 2013 grew only 5.3 percent, the slowest growth month of that year.

Most other industries grew slowly or reported a loss. While slumping coal prices sent the profits in the power industry high, they also dealt a heavy blow to the coal-mining and smelting industry, whose profit plunged 41.2 percent year-on-year in the first quarter.

Ferrous metallurgy, mainly steel manufacturing, reported a 19.9 percent profit slump, while nonferrous metallurgy's profit dropped 13.6 percent.

Huang Libin, an official with the Ministry of Industry and Information Technology, said severe overcapacity in many industrial sectors was the major cause for the bleak situation in China's industrial landscape, which squeezed the factory price of industrial products.

The producer price index, a main gauge of inflation at the wholesale level, contracted 2.3 percent from a year ago. It is the 25th consecutive monthly contraction for the indicator.