Profits of China's state-owned enterprises declined for four consecutive months since August, due largely to high stockpiles and weaker demand during the global financial crisis, sources with the Ministry of Finance said on Sunday.

State-owned enterprises nationwide saw 19.09 trillion yuan (US$2.79 trillion) in business revenues between January and November, a growth of 20.3 percent year-on-year. But the growth was 3.1 percentage points lower than the January-October period.

The total included 1.2 trillion yuan in profits, down 15.7 percent from the same period last year. The decline rate was 7.4 percentage points bigger than the January-October period.

The downward trend was led by the power, nonferrous metal and automotive sectors.

The slowdown for heavy industries was not as serious as light industries, but the impact from the financial crisis has been transferred to heavy industries at a quicker pace than expected, said Shen Minggao, a Beijing-based economist.

In August, when light industries had output value growth slowed to 11 percent, the heavy industry still kept a growth of more than 13 percent. However, the output value growth for heavy industries slowed to 7.3 percent in October, then to 3.4 percent in November.

According to Shen, an unsatisfactory performance by the light industry helped diminish demand from downstream sectors for heavy industrial products.

Moreover, upstream enterprises rushed to buy more raw materials when prices rose weeks earlier and it took time for them to eat up those overstocks, Shen added.

Thanks to recent government economic stimuli, more money will go towards capital construction, which would help heavy industries to recover faster than the light industry, Shen said.

He predicted in the third quarter of next year, state-owned enterprises would begin to step out of the shadow of the financial crisis.

(Xinhua News Agency December 29, 2008)