Profits at China's state firms continue declines

Profits at China's state-owned enterprises (SOEs) continued to slide in the first four months of the year, but at a slower pace as the government's measures to counter the slowing economy begin to take effect, official data showed on Monday.

Combined profits for SOEs dropped 5.7 percent to 704.1 billion yuan (about 115 billion U.S. dollars) during the January-April period, the Ministry of Finance said in a statement. The decline decelerated from the 8-percent fall registered in the first three months and 21.5-percent plunge in the first two months.

The ministry said profits at the SOEs, excluding the three oil giants -- CNPC, Sinopec and CNOOC, and those in coal mining, steel and non-ferrous metal sectors that were struggling with excess capacity, climbed 11.6 percent year on year during the period.

It said SOEs' business revenue was down 6 percent year on year while their operating costs fell 5.5 percent during the period.

The transport, electronics and power generation sectors saw strong increases in profits while the petrochemical, oil, construction materials and machinery industries posted notable profit drops. Coal mining, steel and non-ferrous metal industries reported losses, according to the statement.

To stabilize the economic growth, which slowed to a six-year low of 7 percent in the first quarter, China's central bank has cut the benchmark interest rates three times since November. It also lowered the reserve requirement ratio for commercial banks twice, in February and April.

However, according to the latest HSBC flash manufacturing purchasing managers' index, China's manufacturing activity continued to contract in May, pointing to persistent weakness in the economy that analysts say may prompt more stimulus measures. Endi