Chinese firms face profit squeeze, stats head says

BEIJING - China will enjoy another year of stable and fast growth, but many companies are facing a profit squeeze, the head of the country's statistics bureau said in remarks published on Monday.

Qiu Xiaohua, head of the National Bureau of Statistics, said five sectors -including petroleum, power, coal and non-ferrous metals - accounted for 80 per cent of industrial profits in the first five months of the year, the China Securities Journal reported.

"This indicates that most enterprises made only a slim profit, or were on the verge of losing money," the newspaper quoted Qiu as telling a university audience in Shanghai on Sunday.

But Qiu said neither the profit trend nor excessively rapid growth in investment and credit would detract from China's strong overall economic performance in 2006.

On the positive side of the ledger, Qiu cited strong industrial growth, fast-rising fiscal revenues, a good harvest and robust growth in urban incomes and employment.