Official data on Saturday showed that the profits of China's major industrial firms fell 2.4 percent year-on-year in the first half of 2019. There's a 3.3 percent drop in the first quarter and a 1.9 percent dip in the second, showing a lower pace of decline.
Experts noted that overall global economic growth has come under downward pressure brought about gloomy international trading, and the slower pace of decline points to the stability of China's economy. Successive launch of infrastructure projects and enhancement in tax and fee-reduction policies will help stabilize China's industrial profits in the second half of the year.
The overall profit of China's major industrial companies in the first half of the year was 2984 billion yuan ($433.8 billion), a decrease of 2.4 percent on a yearly basis, according to data released by National Bureau of Statistics (NBS) on Saturday.
Zhu Hong, analyst of the NBS, said in a statement that the drop in profits was mainly due to the impact on a few industries, including automobiles manufacturing, oil processing and steel.
For example, profits of automobile manufacturing industry dropped by 24.9 percent in the first half of the year because of sluggish market demand, Zhu said, and profits of the oil processing sector fell 53.6 percent due to rising crude prices and other prices.
"The car ownership of Chinese residents is approaching saturation, and the era of rapid growth of automobile manufacturing is generally over," Liu Xuezhi, a senior economist at Bank of Communications, told the Global Times on Saturday.
The overall profit of the industry is facing pressure and is likely to remain muted in the near future, Liu said, adding that local governments have been rolling out measures to stimulate the consumption of automobiles, which to some extent will stabilize the profit growth of the sector.
Whereas, according to NBS, industries such as building materials, electricity and electrical machinery have seen their profits increase in the first six months. The profit of building materials industry surged by 11.9 percent and that of electricity sector rose 11.5 percent.
In addition, profits of consumer goods industry grew rapidly, up 7.4 percent year-on-year, and profits of private companies, in particular, rose 6 percent from a year earlier.
Liu noted that profits in the building materials sector have been boosted by the continuous promotion of some infrastructure projects launched this year, which will keep playing an important role in economic growth.
"The effects of governments' tax and fee-reduction policies have been kicking in, especially when the policies have been enhanced since April," Liu said, adding "the profit growth in China's industrial sector would be stable, even though under pressure brought by the gloomy global economy.
