China’s Industrial Profits Surge for Second Month in a Row
China’s industrial earnings grew for the second consecutive month in September, presenting officials with fresh optimism that the world’s second-largest economy may be on the way to recovery. This optimism was fueled by the fact that companies were able to secure buyers despite the fact that demand was sluggish and trade worries were present. The third quarter of the year saw the economy, which is worth $19 trillion, see its weakest growth in a year. This occurred despite the fact that exports exceeded estimates, which served to counterbalance the sluggish demand in the domestic market. The efforts of manufacturers to expand their operations beyond the intensely competitive domestic market were hampered by concerns of the escalation of relations with the United States government.
According to information, there was a rise of 21.6% in the earnings of industrial enterprises over the previous month. This represents the highest rate of growth seen since November 2023. This comes after a spike of 20.4% that was registered in the month of August. The results show that profits climbed by 3.2 percent in the first nine months, which is a significant gain when compared to the 0.9 percent increase that occurred during the period of January to August. A statistician pointed out that the high-tech manufacturing and equipment manufacturing sectors made a major contribution to the headline year-to-date figure. He brought attention to the fact that this number was inflated by a low base of comparison.
The surprising increase in industrial profits for August, which halted a three-month slide, was also influenced by a low base and “should be taken with a grain of salt,” according to experts. This indicates that there are questions about a true recovery in corporate earnings. Due to the lack of demand in the home market, businesses that cater to discretionary spending have been suffering severely. It has been stated that Zhangzhou Pientzehuang Pharmaceutical Co., a prominent manufacturer of traditional medicines, has experienced a fall in its net profit for the third quarter of 28.8 percent, which indicates a second consecutive quarterly decline.
In accordance with the new five-year plan that the Chinese government has developed, the leadership of China has reaffirmed its dedication to increasing the demand from domestic consumers. Nevertheless, in spite of the intensifying competition with the United States, it continues to place an emphasis on manufacturing as part of its goal to developing a modern industrial framework and achieving technological self-sufficiency. There was a decrease of 0.3 percent in profits for state-owned companies over the first nine months of the year. According to the data, businesses operating in the private sector reported a gain in profits of 5.1 percent, while businesses operating in foreign countries recorded a growth of 4.9 percent. These data refer to businesses that earn a minimum yearly revenue of 20 million yuan ($2.81 million) from their core operations. Industrial profit figures are included in this category.
