Chinese industrial profits jumped the most since 2011, underscoring resilience in the economy as authorities intensify their efforts to cut excess capacity and reduce pollution.
Robust factory inflation, industrial output and consumer spending have been keeping the expansion on track this year. Steady growth and sustained profits give policy makers room to attack pervasive pollution, excess capacity and speculative borrowing after President Xi Jinping and top leaders this week signaled they’ll push harder to transition from a rapid growth model to one more focused on high-quality development.
“This pace of growth won’t be sustainable” because the greater pricing power that aided profits will eventually reverse, said Xia Le, chief Asia economist at Banco Bilbao Vizcaya Argentaria SA in Hong Kong. The data most likely reflect companies that avoided being shut by deleveraging or environment curbs, which boosted profits as rivals closed, Xie said.
