The decline in profits of China's state-owned firms eased last month for the sixth month in a row, partly thanks to the government's stimulus package, which favours the sector.
Profits totalled 813.5 billion yuan (HK$923.32 billion) in the first eight months, down 19.6 per cent from a year earlier, compared with a fall of 22.8 per cent in the January-July period and a drop of 27 per cent in the first half, said a statement published on the Ministry of Finance's website.
Profits are falling less sharply in the steel, nonferrous metals, petroleum and machinery sectors, while petrochemical and vehicle firms reported accelerating profit growth. Analysts agreed the smaller profit decline owed much to the swift enforcement of stimulus efforts that gave priority to state-owned enterprises but acknowledged increasing belt-tightening by authorities to improve efficiency at the top state firms.
'The SOEs have indeed benefited from the stimulus efforts a lot, but the roadmap is not blindly done and has proved successful in arresting the slowdown since late last year,' said Ian Stones, the owner of Fast China, a consulting firm that serves some government-owned clients.
The mainland economy rebounded to a 7.9 per cent increase in gross domestic product in the first half from a 17-year low of 6.1 per cent growth in last year's final quarter.
Most of the 8.15 trillion yuan of new bank loans issued - a result of the monetary easing - are believed to have been channelled directly to industrial projects initiated by SOEs or public infrastructure projects whose contractors are mainly government-backed firms.
Cash-rich SOEs have gone on a spending spree, as demonstrated by a few recent high-profile bids from mega SOE developers at land auctions in major mainland cities.
