BEIJING (Reuters) - Annual growth in China state-owned firms’ profits slowed to 3.4 percent in 2014, official data showed on Thursday, as factories struggled to cope with falling prices amid an economic slowdown.
State-owned non-financial companies made combined profits of 2.48 trillion yuan (264 billion pounds) in 2014, up 3.4 percent from the previous year, the Ministry of Finance said on its website.
Combined profits rose an annual 5.9 percent in 2013.
The latest figures also implied a slowdown in profit growth in December. Profits of state firms rose 4.5 percent in the January-November period from a year earlier and 6.1 percent in the first 10 months.
The slowdown mirrored a dip in China’s GDP, which grew at 7.4 percent in 2014, the weakest in 24 years, slipping from 7.7 percent in 2013, as property prices cooled and companies and local governments struggled under heavy debt burdens.
China’s central bank cut interest rates unexpectedly in November, stepping up efforts to support the world’s second-biggest economy as it heads towards its slowest expansion in nearly a quarter of a century.
Manufacturers are struggling to cope with persistent factory-gate deflation, which has eroded profitability as borrowing costs stay elevated.
Profits of firms owned by the central government rose 3.6 percent last year, while companies owned by local governments reported a 2.8 percent rise in profits, the ministry said.
Companies in the coal, chemical and petrochemical sectors reported profit declines in 2014, while the automobile, pharmaceuticals, commercial and trading sectors saw profits rise, it said.
Total assets of state firms rose 12.1 percent to 102.1 trillion yuan last year, while total liabilities increased 12.2 percent to 66.56 trillion yuan, it added.
The Chinese government is undertaking a series of reforms aimed at improving the efficiency, competitiveness and transparency of its state-owned industry.
Reporting by Judy Hua and Kevin Yao; editing by Simon Cameron-Moore