Profit for the top 500 Chinese companies blew past that of their American counterparts for the first time in 2008.
Xinhua: Net profits for the Chinese companies stood at $170.6 billion in 2008, well above the $98.9 billion for US companies in the same period, according to the latest report released on Saturday by the China Enterprise Confederation (CEC) and China Enterprise Directors Association.
Although the financial crisis decreased net profits for the Chinese heavyweights by 12.4 per cent from a year ago, it is far less than the 84.6-per cent fall experienced by US companies
Obviously, this was largely because US profits were slammed by massive bank write-downs. The vice-president of the CEC admitted that that this was a bit of a fluke and Chinese companies still have a long way to go in terms of international competitiveness.
While we hope this still qualifies as yet another sign of China’s coming of age, some of the details were a bit worrisome.
Half of the top 10 profit makers on the CEC list are financial companies, including banks and insurance companies. “Compared with the US, where many IT companies have the strongest earning potential, the best money earners in China are still banks,” said Xiong Xiaoge, vice-president of US venture capital IDG.
So let’s see here. China in 2008: Easy money, aggressive lending practices, and financials earning a large share of corporate profits. Hmmm… haven’t we seen this movie?