Earnings of Chinese enterprises likely to moderate in 2004: S&P

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Last updated at: (Beijing Time) Friday, October 31, 2003

Earnings of Chinese enterprises likely to moderate in 2004: S&P

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The industrial sector in China's mainland is likely to maintain a high rate of earnings growth in the second half of this year, but the momentum could slow in 2004,Standard & Poor's announced here Thursday.

Director of Corporate & Infrastructure Ratings of Standard & Poor's John Bailey said their survey on China's top 50 enterprises showed that factors including massive inflows of overseas investment since China joined the World Trade Organization and the rising oil and steel prices have generated significant growth in corporate earnings in the mainland.

Such rapid growth, however, is unlikely to sustain, he added.

He elaborated that foreign direct investment in the country has tapered off recent months, while the Chinese government is tightening controls on investment growth in overheated industries such as property and automobile manufacturing.

Moreover, the stabilization of product prices would also resultin lower profits for the companies.

Bailey pointed out that companies should lower their cost structures and improve their facilities and productivity so as to compete in a more competitive environment.

Standard & Poor's ranked the top 50 according to their revenue and profit. Among them, the oil and natural gas producers and steel industries were the best performing companies in 2002 and 2003, with Petro China Co. Ltd. earning the biggest net income of 46.9 billion yuan (6.01 billion US dollars) in the year of 2002. ��

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