The profits of China’s major industrial enterprises grew 10.1 percent year-on-year in September, marking the fifth straight month of profit growth, as policy measures to offset the economic impact of the COVID-19 outbreak have achieved significant results, the National Bureau of Statistics said on Tuesday.
Analysts said the uptick pointed to a sound recovery and the resilience of China’s industrial economy, and the improvements in both supply and demand are likely to continue driving the sales of industrial companies in the coming months.
According to the bureau, the profits of China’s industrial firms－large enterprises with an annual business turnover of at least 20 million yuan ($2.98 million)－reached 646.4 billion yuan last month.
Total industrial profits in the first nine months of this year fell 2.4 percent year-on-year to 4.37 trillion yuan, but the decline was 2 percentage points less than in the first eight months of this year.
Zhu Hong, a senior statistician with the bureau, said profit growth in September was aided by significant recoveries in key sectors, including the automobile manufacturing, nonferrous metal smelting, electricity and heat production and supply industries.
Automobile manufacturing, for instance, saw its profits surge as much as 53.8 percent year-on-year last month, Zhu said.
“Industrial production and sales recovered quickly, prompting profits to increase quarter by quarter, and the supply-demand relationship continued to improve,” Zhu added.
The profit data came after the bureau announced earlier this month that industrial output rose by 6.9 percent on a yearly basis in September in China, the sixth consecutive month of growth.
Driven by the steady growth of industrial revenue, the profits of major industrial firms grew 15.9 percent year-on-year in the third quarter, marking a sharp rebound from a 36.7 percent decline seen in the first quarter, according to the bureau.
Qin Hailin, a senior industrial economy researcher at the China Center for Information Industry Development, said favorable government policies have played a positive role in helping industrial companies resume production and stabilize their supply chains. Meanwhile, the market demand for key products, such as automobiles, has rebounded.
Supportive measures, including tax and fee cuts as well as reductions in electricity, land and rental costs, have also effectively reduced the companies’ overall operational costs, Qin said.
Zhu Jianfang, chief economist at CITIC Securities, said in a research note that since the start of the third quarter, the production and operating conditions of industrial enterprises have improved steadily, which has led to a significant improvement in their profits.
“The annual profits of China’s major industrial enterprises are expected to post a slight positive growth for this year,” Zhu said.
Specifically, the manufacturing industry, which has seen its profits shift from negative to positive growth in the third quarter, is expected to maintain a sound momentum in the last quarter of 2020, Zhu added.