Friday, March 26, 2010

Mainland’s industrial margin recovers to pre-crisis level

Everyone is experiencing some kind of diorientations on the recent strong business recovery. I met quite a number of senior management from various corporations during this business trip. They have not been able to sort out very clearly on the reasons of strong business recovery. Orders flooded beyond what their current capacity can handle. Their attitudes were like "what the heck, make hay while the sun shines - just enjoy the ride while it's still good".

(SCMP)Profit margins at mainland industrial enterprises have recovered to pre-crisis levels, thanks to a massive domestic stimulus plan and a rebound in demand from abroad, the National Bureau of Statistics said on Friday.

The impressive recovery in industrial profitability is likely to give Beijing more comfort to exit its crisis-mode policies.

Mainland industrial profits jumped 119.7 per cent in the first two months of this year from a year earlier, the statistics agency said.

The agency said the strong growth was mainly due to a low base in the first two months of last year when mainland’s industrial profits plunged 37.3 per cent.

The core business profit margin for mainland industrial firms was 5.69 per cent in the first two months of this year, a hefty rise from the 3.62 per cent a year ago and a modest increase from the 5.57 per cent recorded in the first two months of 2008 when the international financial crisis had yet to erode mainland profit margins.

“It showed that China’s industrial profit margin has just recovered to the pre-crisis level,” the statistics agency said in a statement. But it added that profit margins in oil exploration, steel, electronics have yet to recover to pre-crisis levels.

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