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BEIJING: Profits at China’s industrial firms extended gains for a third month in October, adding to signs of a stabilising economy following a run of mostly upbeat data suggesting Beijing’s support measures have helped bolster a tentative comeback.
The 2.7 per cent year-on-year rise came on the back of an 11.9 per cent gain in September and a surprise 17.2 per cent increase in August, and follows stronger-than-expected industrial and consumption activity over October.
For the first 10 months of 2023, profits slid 7.8 per cent from a year earlier, narrowing from a 9 per cent decline in the first nine months, data from the National Bureau of Statistics (NBS) showed on Monday.
The world’s second-largest economy has struggled to mount a strong post-Covid recovery as distress in the housing market, local government debt risks, slow global growth and geopolitical tensions dented momentum.
A flurry of policy support measures has had only modest effect, raising pressure on authorities to roll out more stimulus.
“Three consecutive months of positive profit growth suggest that the worst times, when profitability was squeezed by high input costs, overcapacity and soft demand, are over,” said Xu Tianchen, senior economist at the Economist Intelligence Unit.
“However, the volatility of profits is a sign enterprises remain highly sensitive to input costs,” he added. “The sharp slowdown of year-on-year profit growth was partly driven by a rebound in energy prices.”
LONGi Green Energy Technology Co, a major domestic solar energy manufacturer, saw its third-quarter net profit plummet 44.1 per cent to 2.5 billion yuan ($346.7 million), hit by macroeconomic headwinds and a supply glut.
China’s industrial output grew 4.6 per cent in October, compared with the same period a year earlier, although analysts say a full-blown recovery remains some time away, even if the economy did grow faster-than-expected in the third quarter.
“Transforming the economic growth mode is more important than pursuing a high growth rate,” China’s central bank governor said in a speech this month, suggesting an urgent need for longer-term structural reforms as investment-led growth loses steam.
State-owned firms posted a 9.9 per cent decline in earnings in the first 10 months, foreign firms recorded a 10.2 per cent slide and private-sector companies saw profits down 1.9 per cent, according to a breakdown of the NBS data.
Industrial profits data covers firms with annual revenues of at least 20 million yuan (USD 2.74 million) from their main operations.
The 2.7 per cent year-on-year rise came on the back of an 11.9 per cent gain in September and a surprise 17.2 per cent increase in August, and follows stronger-than-expected industrial and consumption activity over October.
For the first 10 months of 2023, profits slid 7.8 per cent from a year earlier, narrowing from a 9 per cent decline in the first nine months, data from the National Bureau of Statistics (NBS) showed on Monday.
The world’s second-largest economy has struggled to mount a strong post-Covid recovery as distress in the housing market, local government debt risks, slow global growth and geopolitical tensions dented momentum.
A flurry of policy support measures has had only modest effect, raising pressure on authorities to roll out more stimulus.
“Three consecutive months of positive profit growth suggest that the worst times, when profitability was squeezed by high input costs, overcapacity and soft demand, are over,” said Xu Tianchen, senior economist at the Economist Intelligence Unit.
“However, the volatility of profits is a sign enterprises remain highly sensitive to input costs,” he added. “The sharp slowdown of year-on-year profit growth was partly driven by a rebound in energy prices.”
LONGi Green Energy Technology Co, a major domestic solar energy manufacturer, saw its third-quarter net profit plummet 44.1 per cent to 2.5 billion yuan ($346.7 million), hit by macroeconomic headwinds and a supply glut.
China’s industrial output grew 4.6 per cent in October, compared with the same period a year earlier, although analysts say a full-blown recovery remains some time away, even if the economy did grow faster-than-expected in the third quarter.
“Transforming the economic growth mode is more important than pursuing a high growth rate,” China’s central bank governor said in a speech this month, suggesting an urgent need for longer-term structural reforms as investment-led growth loses steam.
State-owned firms posted a 9.9 per cent decline in earnings in the first 10 months, foreign firms recorded a 10.2 per cent slide and private-sector companies saw profits down 1.9 per cent, according to a breakdown of the NBS data.
Industrial profits data covers firms with annual revenues of at least 20 million yuan (USD 2.74 million) from their main operations.
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