Three state-run oil and gas enterprises in China reported a sharp fall in their profit this year. The mid-year financial reports of another ten state-owned businesses ranging from energy, steel and auto manufacturing also showed a 32.8 billion yuan (US$5.1 billion) decrease in total profits over the first half of this year.

Sinopec, China's largest petroleum and chemical corporation, reported the biggest fall in profits, earning only 23.6 billion yuan (US$3.7 billion) over the first six months this year, representing a 16.5 billion (US$2.5 billion) decrease in profits compared to the same period last year. China National Offshore Oil followed with 31.8 billion yuan (US$5 billion), a 19% decrease in profit year on year. China National Petroleum Corporation's net profit also plunged by 3.7 billion yuan (US$582 million) or 6%, according to the Guangzhou-based Yangcheng Evening News.

Other ten state-owned businesses named by the Chinese media include telecom operators, automakers, coal and aluminum producers, power companies, railway manufacturers and shipyards. Their profits were estimated to be down by 200 million yuan (US$31 million) per day over the first six months of the year comparing to the same period in 2011. China Southern Airlines and Wuhan Iron & Steel cut their profit outlook by 50%, while Angang Steel reported profits 1.9 billion yuan (US$299 million) less than the same period of last year.

These state-owned businesses saw their net profits increase 8% between May and June and then decline by 150 million yuan (US$23 million) in July, according to China's State-owned Asset Supervision and Administration Commission.

The drop was attributed to weak market demand, rising raw material costs and high inventory levels. Sinopec said that while the price of crude oil has soared and increased its costs significantly, the price of its finished petroleum products has been controlled by the government, according to the Yangcheng Evening News.

Sinopec reported 12.3% growth in revenue in the first quarter but this declined to 9% by June and further to 8.4% as of July. The commission warned that these state-owned companies may begin to experience much slower growth over the next three to five years after seeing rapid growth over the last three decades, reported the Chinese media.