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

Business revenues for the SOEs grew 20.3 percent to 19.09 trillion yuan (US$2.79 trillion) year on year between January and November but the growth fell 3.1 percentage points over the first 10 months.

The total amount included 1.2 trillion yuan in profit, a fall of 15.7 percent from the same period last year. The decrease was 7.4 percentage points higher than the January-October period.

The fall in profit was led by the power, nonferrous metal and automotive sectors. Light industries also suffered but the impact from the financial crisis has been felt quicker in heavy industries, said Shen Minggao, a Beijing-based economist.

In August, when the growth in output value of light industries slowed to 11 percent, the heavy industry sector still expanded more than 13 percent.

However, the rise in output value for the heavy industry sector slowed to 7.3 percent in October and 3.4 percent in November.

Shen attributed the fall to an unsatisfactory performance by the light industry sector which weakened demand from downstream sectors for heavy industrial products.

Moreover, upstream enterprises rushed to increase raw materials purchases when prices rose weeks earlier and it took time to run down the overstocks, Shen added.

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

He predicted in the third quarter of 2009, SOEs would begin to recover from the financial crisis

(Xinhua News Agency December 29, 2008).