China April industrial profit growth rebounds to six-month high

Employees working at a factory in Huaibei in China's eastern Anhui province. (AFP)
Updated 27 May 2018
0

China April industrial profit growth rebounds to six-month high

  • Employees working at a factory in Huaibei in China's eastern Anhui province. (AFP)
  • Higher factory prices and stronger demand help rebound

BEIJING: Profits earned by Chinese industrial firms in April rose at their fastest pace in six months, data from the National Bureau of Statistics (NBS) showed on Sunday, as factories benefited from higher prices and strong demand.

Profits in April rose 21.9 percent year-on-year to 576 billion yuan ($90.14 billion), the quickest since October, bringing gains for the first four months of 2018 to 15 percent.

The data suggests China’s industrial sector is still seeing solid growth momentum despite curbs on pollution and rocky trade relations with the US.

Last month’s rebound was helped by lower comparison figures for April 2017, higher factory prices and stronger demand, He Ping, head of NBS’ industrial division, said in a statement.

It was a significant improvement over March’s 3.1 percent growth that was the slowest in over a year and which government officials had blamed on the timing of the Lunar New Year holiday.

The higher April data should help ease concerns of slowing momentum in China’s economy as the country implements tougher pollution controls on “smokestack” industries and cash-strapped regional governments cut back on big investment projects, curbing demand for building materials.

Profit growth for Chinese industrial firms has softened from last year’s strong pace as factory gate price gains weaken. In the first four months of 2017, profits rose 24.4 percent.

China’s producer price inflation picked up to 3.4 percent in April from March but was much lower than 6.4 percent in the year-ago period.

Weaker profit growth suggests companies may be reluctant to invest and hire new staff, while making it harder for debt-laden firms to service their debt, especially state-owned enterprises that account for the bulk of the country’s high leverage.

A Reuters analysis showed that debt growth for Chinese companies has slowed to the lowest rate in more than a decade, but companies have also seen profit margins squeezed to their lowest level in two years.

April economic data had shown signs of slowing momentum as investment growth touched a near 20-year low and retail sales growth weakened.

Despite stronger-than-expected first-quarter economic growth, economists polled by Reuters still expect a gradual slowdown to around 6.5 percent this year from 6.9 percent in 2017, as rising borrowing costs weigh on consumption and investment.

Beijing continues to call for tighter controls on risky investments and speculation in the property sector, but does not want to cut off funding to firms in the “real economy” such as manufacturing firms that are a key source of jobs.

There have also been signs that policymakers have moved to a slighter looser stance as they look to ensure growth doesn’t slow too much, while also keeping financial risks under control.

No industrial sectors recorded year-on-year losses over January to April, the data showed.

But earnings in the computer and telecommunications sector fell 5.3 percent over the four months, though that was a slight improvement from an 11 percent decline in the first quarter.

Liabilities of industrial firms rose 6.1 percent year-on-year as of end-April, according to the statistics bureau.

Profits at China’s state-owned firms rose 26.2 percent to 627 billion yuan for Jan-April, compared with a 23.1 percent rise in the first quarter.


Search engine Baidu becomes first China firm to join US AI ethics group

Updated 17 October 2018
0

Search engine Baidu becomes first China firm to join US AI ethics group

  • The Partnership on AI (PAI), which counts Alphabet Inc’s Google, Apple Inc. and Facebook Inc. as members, is a body that develops ethical guidelines for AI research
  • Baidu’s inclusion in the group comes as Chinese and US companies are looking to ramp up cooperation on AI

BEIJING: Chinese search engine Baidu has become the first Chinese company to join an artificial intelligence (AI) ethics group led by top US tech firms, amid wider political clashes over AI competition between China and the US.
The Partnership on AI (PAI), which counts Alphabet Inc’s Google, Apple Inc. and Facebook Inc. as members, is a body that develops ethical guidelines for AI research, including ensuring research does not violate international conventions or human rights.
Last year China’s industry ministry named Baidu as one of four national AI champions, and the search firm has invested heavily in autonomous driving and deep learning in recent years.
“Baidu’s admission represents the beginning of PAI’s entrance into China. We will continue to add new members in China and around the world as we grow,” said PAI in a statement on Tuesday.

 

Baidu’s inclusion in the group comes as Chinese and US companies are looking to ramp up cooperation on AI, despite a looming political scuffle between the US and China over technology transfers.
Last year China set out a roadmap to become a world leader in AI by 2025, with plans to invest roughly $400 billion in the industry in the coming years.
The ambitions have rankled the US government, which has discussed plans to bolster security reviews of cutting-edge technology, including AI, over fears that China could access technology of strategic military importance.
China’s AI roadmap encourages technology sharing between private, public and military research groups.
Despite the clash, US companies have expanded their AI presence in China while Baidu and other Chinese firms have launched AI research labs in the US.
Last month China’s cyber ministry hosted Google, Amazon Inc. and Microsoft Corp. at its annual AI forum. All three companies have launched AI research labs in China over the past year, despite tightening censorship and data restrictions that limit the companies’ involvement in the market.
At the forum, top government officials stressed that China’s development of AI technology would be ethically conducted, adding that they have plans to retrain workers who lose their jobs to AI.

Decoder

China’s AI roadmap encourages technology sharing between private, public and military research groups.