A pedestrian walks on a street as smoke billows from the chimneys of a factory in Dalian, China. (Photographer: Qilai Shen/Bloomberg)

China Industrial Profits Keep Pace as Factory Inflation Holds Up

(Bloomberg) -- Chinese industrial firms maintained a profit surge, underscoring the economy’s resilience even amid slowing factory output and investment.

Industrial profits increased 16.5 percent in July from a year earlier, versus the 19.1 percent pace a month earlier, the nation’s statistics bureau said Sunday.

The robust earnings are giving policy makers room to combat excessive industrial capacity and curb speculative borrowing ahead of the key Party Congress this fall. That picture may not be sustainable though, as slowing producer inflation and rising real interest rates may squeeze factories and mills in the coming months.