By Diao Ying (China Daily)
Updated: 2007-11-30 10:32

Chinese enterprises are making large profits faster because of better management, efficient capital operation and investment gains, according to a report released yesterday.

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The report, based on research by the China Academy of Social Sciences and the China Business Journal revealed that the profit of Chinese enterprises had increased by 37.6 percent each year since 1998.

Yao Jingyuan, chief economist of the National Bureau of Statistics said the fast increase of corporate profit was closely linked to China's surging economy and its GDP which increased by 11.5 percent this year, the highest increase since 1995.

Corporate profits increased by 37 percent from January to August, 7.9 points higher than last year.

Manufacturing industries have witnessed stunning growth in particular.

Profits for the chemical fiber manufacturing industry more than doubled over last year, and the profit from equipment manufacturing increased by 66.5 percent.

In 2006, the overall profit of industrial enterprises in China reached nearly two trillion yuan, and Yao estimated that there would also be a major increase this year.

Jin Bei, president of China Business Journal and a senior researcher at CASS, said: "We concluded that the profitability of enterprises is closely related to their competitiveness."

But despite overall open competition, manipulation does exist in some industries, especially in the resources sector, Jin said.

Investment has played an important part in overall gains, accounting for an estimated 18 percent of profit earnings.

But this is risky, according to Jin, who said companies that invest in "other sectors" were not as sustainable as those developing their own industry.

Increased profits are also coming from internal tightening measures, such as pay for workers, which are generally not increasing as companies earn more.

Measured comparisons of workers' salaries against company profits show that salaries have stagnated from 1998 to 2006.

"This shows that compared with the overall economy, what the workers are getting is falling," Jin said.