China’s industrial profits surge 21.6% in September, biggest jump in nearly two years
Employees work on the assembly line of new energy vehicles at the factory of Chinese EV startup Leapmotor in Jinhua, Zhejiang Province, China, on April 1, 2024.
Xi Kuanbing | VCG | Visual China Group | Getty Images
China’s industrial profits rose 21.6% in September from a year ago, the National Bureau of Statistics said on Monday; This was because Beijing’s campaign to curb price wars helped ease pressure on manufacturers despite ongoing trade tensions with the United States.
The sharp jump marked the biggest gain since November 2023, extending a strong recovery that began in August, when industrial profits rose 20.4% year-on-year.
Official data showed that profits of large industrial companies increased by 3.2% in the first nine months of the year.
At a time when producer price deflation has stretched into its third year, the recovery in corporate profitability has been largely helped by Beijing’s policies aimed at reducing fierce price competition between industrial sectors.
While consumer prices in China fell more than expected, falling by 0.3% in September compared to the previous year, the producer price index also decreased by 2.3%.
As the world’s second-largest economy grapples with a protracted housing crisis, weak labor market conditions and rising export declines, Chinese manufacturers have weathered uncertain trade policies with the United States and weak consumer confidence at home.
Although the country’s overall exports remain resilient this year, analysts expect trade growth to slow in the final quarter, due in part to last year’s high base.
“We expect export growth to slow in Q4, after rising from 6.2% in the second quarter to 6.6% in the third quarter, due to a high base and rising trade barriers globally,” said a team of economists at Nomura.
China’s economy grew by 4.8% in the third quarter, the slowest rate in a year. According to Wind Information data dating back to 1992, fixed asset investment contracted an unexpected 0.5% in the first nine months of the year; this was the first such decline since 2020 during the pandemic.
Industrial production grew faster than expected in September, increasing by 6.5% compared to a year ago and 5.2% compared to the previous month.
Analysts said the soft headline figures suggested Beijing may not see much urgency in introducing more stimulus measures to meet its growth target of about 5% for this year.
While Chinese policymakers pledged to boost domestic demand at a high-profile economic planning meeting earlier this month, they also emphasized the need for technological breakthroughs at technological frontiers and improving the country’s industrial capabilities.
“References to ‘increasing domestic demand’ and ‘improving livelihoods’ are present but relatively less prominent,” said Louise Loo, head of Asian Economics at Oxford Economics.
“These suggest that while policymakers acknowledge weak household sentiment and savings growth, they do not foresee large-scale consumption stimulus in the next five years,” Loo said. he added.
This is breaking news. Please refresh for updates.
