China’s industrial profits expand for second month in September

[BEIJING] China’s industrial profits rose for a second straight month in September, offering officials fresh optimism that the world’s second-largest economy is turning a corner as firms found buyers despite weak demand and trade uncertainties.

The US$19 trillion economy slowed to the weakest pace in a year in the third quarter, despite forecast-topping exports that offset fragile domestic demand.

Manufacturers’ forays beyond the intensely competitive domestic market were overshadowed by concerns over mounting tensions with Washington.

A 21.6 per cent increase in industrial profits last month, the fastest pace since November 2023, followed a 20.4 per cent jump in August, data from the National Bureau of Statistics showed on Monday.

Profits were up 3.2 per cent in the first nine months versus a 0.9 per cent rise in the January-August period, according to the data.

The high-tech manufacturing and equipment manufacturing sectors gave the headline year-to-date figure a boost, said NBS statistician Yu Weining, who added the number was supported by a low base of comparison.

Nomura economists cautioned that August’s unexpected surge in industrial profits, which broke a three-month streak of declines, had also partly been buoyed by a low base and “should be taken with a grain of salt,” suggesting scepticism about a genuine recovery in corporate earnings.

Weak domestic demand particularly strained businesses catering to discretionary spending.

Zhangzhou Pientzehuang Pharmaceutical, a major traditional medicine maker, reported a 28.8 per cent drop in third-quarter net profit, marking its second consecutive quarterly decline.

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China’s leadership reaffirmed efforts to expand domestic consumer demand in the government’s new five-year plan. But its pledge to build a modern industrial system and achieve technological self-reliance still prioritises manufacturing amid an intensifying rivalry with the United States.

State-owned firms recorded a 0.3 per cent slide in profits in the first nine months. Private-sector firms saw profits up 5.1 per cent while foreign firms posted a 4.9 per cent increase, the data showed.

Industrial profit figures cover firms with annual revenue of at least 20 million yuan (S$3.6 million) from their main operations. REUTERS