September saw improvements in China’s industrial companies continue for a second month, indicating a stabilizing economy as the government implemented a flurry of pro-business policy initiatives.
The unexpected 17.2% increase in August and September’s higher-than-expected industrial and consumer activity led to the 11.9% year-over-year increase.
Profits fell 9% in the first nine months compared to the same period last year, which was less than the 11.7% drop in the first eight months, according to statistics released on Friday by the National Bureau of Statistics (NBS). Industrial earnings bounced back after two-quarters of decreases to a 7.7% gain in the July–September period, according to an accompanying statement by NBS statistician Yu Weining.
Zhou Maohua, an analyst at China Everbright Bank, stated that the September figure shows an overall improvement in domestic industrial sector operations and a continuous recovery in market demand. She added that the high base from the previous year was the reason for the decrease in year-over-year growth.
According to Zhou, a decline in producer prices last month suggested that certain businesses in the industry were still lowering costs to boost sales, which harmed total industrial revenues and profits.
He cited the lag effect in domestic macro pump priming as one of the reasons why the recovery in industrial profitability is anticipated to continue in the upcoming months.
China’s blue-chip CSI300 Index (.CSI300) increased by 0.6% following a weaker morning session. The second-biggest economy in the world has stabilized, according to a string of recent statistics. It had expanded quicker than anticipated in the third quarter after seeing a sharp decline in momentum after a brief post-COVID rebound.
Analysts credit the stabilization to some legislative initiatives implemented in the last several months. However, the crisis-ridden real estate market’s ongoing weakness still significantly hampered the economy and business profits.
Due to fierce competition and waning demand, Chinese battery giant CATL (300750. SZ) said last week that its third-quarter profit growth had slowed dramatically, making it its worst since the year’s beginning.
Following the release of third-quarter GDP figures, China’s central bank governor, Pan Gongsheng, made his first policy statements and pledged to support the country’s economic recovery, emphasizing the need to reduce financial risks while increasing domestic demand.
An analysis of the NBS data shows that during the first nine months, state-owned enterprises experienced an 11.5% loss in earnings, foreign companies experienced a 10.5% decline, and private sector companies suffered a 3.2% decline.
The industrial profit figures include Businesses with yearly revenues from their primary activities of at least 20 million yuan ($2.73 million).
