November 28, China's industrial enterprises posted an annual increase of 25.3% in profits in the first 10 months of 2011, 1.7 percentage points lower than in the first 3 quarters, the National Bureau of Statistics (NBS) said in a statement on Sunday.

China’s industrial profits have showed a downshift since the beginning of this year. Growth stood at 34.3% year-on-year in the January-February period and 28.7% in the first 6 months.

In October alone, industrial profits expanded 12.5% y-o-y to RMB 438.3 billion ($68.7 billion), the NBS said.

Profits of industrial enterprises hit RMB 4.12 trillion in the first 10 months, the NBS said.

The NBS data is based on a pool of industrial businesses with at least RMB 20 million in annual sales revenues each.

Among the 39 industries surveyed, 36 sectors saw profit growth increase in the first 10 months. The oil refining, coking and nuclear-fuel processing sector saw profits plunge 89.8% compared with a year earlier.

Private businesses posted the fastest profit growth, at an annual rise of 44.3%, followed by collectively owned enterprises with 33%, equity-holding companies with 30.3%, state-owned enterprises with16.6% and overseas-funded firms with 11.6%, the NBS statement said.

The decline in profit growth was partially the result of the central government’s proactive adjustment of economic structure, and on the other hand, increases in raw materials and labor costs also squeezed profits, said Zheng Chaoyu, Professor of Economics at Renmin University of China (RUC) and Director of the RUC Institute of Economic Research.

Lu Zhengwei, chief economist at Industrial Bank, said the continuous slide in profit growth indicted the lasting impact of monetary tightening policies, while the 25.3% growth showed the economic situation is generally stable.

In view of the start of selective easing, industrial profits may pick up in 2012, Lu said.