Profits of Chinese industrial companies rose to 3-year peak

The profits of Chinese industrial companies rose to 3-year peak and thus signaled that the manufacturing sector continues to stabilize and there are good prospects for the payment of debts. The profit of industry increased by 19.5% yoy in August to 534.8 billion CNY (80.2 billion USD), according to the National Statistical Office. Other data from August showed that new loans, industrial production, investment in fixed assets perform better than expected.

The growth of industrial profits was driven mainly by commodity prices and the booming real estate market, which is in line with recovering production costs, variations in which this year will be positive. Higher profits have shown that companies are better able to pay its debts.

A number of economists increased their forecasts for Chinese GDP in 2016 because of evidence that fiscal stimulus have helped the economy recovers.

The strong sales growth, recovering prices and lower costs contributed to the increase in profits. Although growth in August is strong, it is largely due to the low base of comparison last year.

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