Profits show real economy recovery

Transportation and logistics, food and beverages, and infrastructure-related sectors reported profit surges in 2016, according to annual results filed by companies listed in Shanghai and Shenzhen, showing China’s real economy is recovering, and is shifting to the consumption-driven growth model.

By early April, 1,195 companies had released their annual results for 2016, among which 1,142 reported profits.

High-tech companies and the manufacturing sector are expected to perform better in 2017, benefiting from upgraded and expanding consumption trend across the nation, said analysts. Annual results of companies in these sectors are recovering, as shown in their 2016 annual results.

Banks, as usual, are among the profit leaders in the 2016 A-share market. The top five most profitable companies of all A-share listed companies are Industrial and Commercial Bank of China, China Construction Bank, Agricultural Bank of China, Bank of China, and Bank of Communications, with combined profit of more than 530 billion yuan ($77 billion).

Analysts said that banks’ annual results showed that consumption-related loans are growing fast, reflecting the overall trend of China’s economic growth pattern which is shifting from intensive investment-driven to consumption driven.

“For example, personal consumption loans, such as for cars, will expand soon,” said a research note from Haitong Securities.

Sheng Laiyun, spokesman with the National Bureau of Statistics, said last month that major indexes from the beginning of the year show that the real economy is getting more “active”, and profits are growing.

He said in 2017, as supply-side reform deepens and pro-real economy market conditions improve, there will be more demand for industrial output.

For banks, lending to enterprises, particularly manufacturers, are likely to reach higher levels than in 2016, according to Bank of Communications.

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