China's Consumption Of Coal Steadily On The Rise
A coal miner walks on coal seams in an open pit coal mine on Aug. 19, 2006 in Chifeng of Inner Mongolia, China.  China Photos Getty Images

What China’s Latest Industrial Data Says About the Economy

Nov 28, 2016

Profit growth in China's industrial sector picked up in Oct ober, aided by stronger sales and higher prices, suggesting further strengthening of the world's second-largest economy, though growth was skewed towards high-polluting heavy industry.

There has been widespread speculation in China's commodities futures market this year, with coal prices hitting records in recent weeks, and economists say growth driven by loose money policies won't last.

Indeed, a subdued property market is expected to drag on growth in the first two quarters next year, as policymakers introduce curbs to cool home prices, which could hit profits of companies producing construction material s.

Profits in Oct ober rose 9.8% to 616.1 billion yuan ($89.1 billion), the National Bureau of Statistics (NBS) said in a statement on Sunday. Profits in September rose 7.7%.

Industrial profits rose 8.6% in the first 10 months from the same period a year earlier, similar to an 8.4% growth rate in the first nine months of the year.

Profits in the coal mining sector rose 112.9% for January- Oct ober from the same period a year earlier while manufacturing profits rose 13.2%.

"Although Oct ober industrial profit growth picked up, the structure of growth was not ideal," NBS official He Ping said in a statement accompanying the data.

" Profits in traditional raw material production increased relatively quickly...while high technology and equipment manufacturing profit growth slowed," He said.

Profit growth was overly reliant on rising prices, and industrial firms need organic improvement to see better results, He added.

Profits for iron and steel production and processing companies rose 310.2% in January- Oct ober.

For more on business in China, watch Fortune's video:

China's producer prices jumped more than expected in Oct ober as prices of coal and other raw material s surged in the midst of a supply crunch and a pick-up in the economy. The producer price index is also expected to stay positive in coming months.

Chinese industrial firms' liabilities at the end of Oct ober were 5.1% higher than at the same point last year and rose slower than assets.

The data covers large enterprises with annual revenues of more than 20 million yuan from their main operations.

Profits at state firms rose 0.4% in the first 10 months of 2016 from a year earlier, marking the first increase in year-to-date earnings for state-owned companies this year, the finance ministry said on Friday.

China's industrial profits have rebounded strongly this year after falling last year, boost ed by a recovery in commodities prices as supply tightened due to a capacity reduction drive and an infrastructure boom.

All products and services featured are based solely on editorial selection. FORTUNE may receive compensation for some links to products and services on this website.

Quotes delayed at least 15 minutes. Market data provided by Interactive Data. ETF and Mutual Fund data provided by Morningstar, Inc. Dow Jones Terms & Conditions: S&P Index data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Terms & Conditions. Powered and implemented by Interactive Data Managed Solutions