China state firms' profit growth quickens slightly in Jan-Oct

[BEIJING] Profit growth of China state-owned firms quickened slightly in the first 10 months of 2014, but there is little sign of a turnaround as factories struggle to cope with falling prices and sluggish demand.

State-owned non-financial companies made combined profits of 2.1 trillion yuan (US$342 billion) between January and October, up 6.1 per cent from the same period of 2013, the Ministry of Finance said on Tuesday.

The pace picked up slightly from 5.9 per cent in January-September, but trailed the 8 per cent rise seen in the January-August period.

China's manufacturers are struggling to cope with persistent factory-gate deflation, which has eroded their profitability as borrowing costs stay elevated.

China's central bank cut interest rates unexpectedly on Friday, stepping up efforts to support the world's second-biggest economy as it heads towards its slowest expansion in nearly a quarter of a century.

Profits of firms owned by the central government rose an annual 6.8 per cent in the first 10 months while companies owned by local governments reported a 4.5 per cent rise in profits, the ministry said.

Companies in steel, transportation, automobile, property construction and power industries enjoyed profit rises, but firms in the non-ferrous metal, coal, chemicals, petroleum and telecommunications sectors saw profits fall, it said without giving details.

The ministry added that the total assets of state firms rose 11.9 per cent to 100.4 trillion yuan (US$16.35 trillion) at the end of October, while total liabilities climbed 12.1 per cent to 65.5 trillion yuan.

Chinese state firms - which control sectors regarded to be of vital national interest - are often criticised for being inefficient and not turning over more of their profits to the nation despite being generously subsidised by the state.

REUTERS