China's industrial profit up 12.2% in 2013

BEIJING - Chinese industrial businesses saw their profits rise 12.2 percent year on year in 2013, official data showed on Tuesday.

The total profits of industrial companies with annual revenues of more than 20 million yuan ($3.28 million) reached 6.28 trillion yuan last year, the National Bureau of Statistics said in a statement.

The growth rate was higher than that in 2012, but lower than that in 2011. The companies' profits rose a mere 5.3 percent in 2012, compared with the 25.4-percent surge registered in 2011.

In December 2013 alone, those companies' combined profits climbed 6 percent year on year to 942.53 billion yuan.

The monthly growth, however, was 3.7 percentage points lower than that in November.

As the first available hint on economic performance for the new year, the flash reading for the China manufacturing Purchasing Managers' Index (PMI) dropped to 49.6 in January, falling below the 50-threshold that demarcates expansion and contraction and marking the lowest point in six months, according to results of a preliminary HSBC survey released on January 23.

The PMI reading does not bode well for the world's second-largest economy as 2014 marks the first year for China to deliver its reform promises, entrenching doubts among some skeptics that the country may still face the likelihood of falling into a "middle-income trap" or even experiencing a hard landing.

China's economy expanded 7.7 percent in 2013, overshooting the official target of 7.5 percent. The government has yet to announce its 2014 growth target, which analysts widely expect to be set at 7 percent or 7.5 percent.

At an annual tone-setting economic conference last year, the government pledged to maintain continuous and stable economic policy while pushing forward reforms to achieve "reasonable growth" this year. Most tasks are scheduled to be completed by 2020.

"We expect the economy to decelerate to 7.4 percent in 2014 from 7.7 percent in 2013. Our forecast is based on the assumption of a policy shift from stabilizing growth to structural reform," said Zhu Haibin, J.P. Morgan China Chief Economist in an email note.