Profits at China’s major industrial firms rose steadily in the first 10 months, with equipment manufacturing and high-tech sectors reporting rapid growth, official data showed on Thursday.
During the first 10 months, China’s industrial enterprises with an annual revenue of at least 20 million yuan ($2.8 million) saw their total profits rise 1.9 percent year-on-year to 5.95 trillion yuan, following a 3.2 percent increase in the first nine months, data from the National Bureau of Statistics showed on Thursday.
NBS statistician Yu Weining attributed the steady growth in the first 10 months to the government’s effective measures to strengthen both domestic and international circulations, which led to steady growth in corporate profitability and high-quality development of the industrial sector.
Meanwhile, Yu warned of the complex and grim international environment and structural issues at home, saying more efforts should be made to further boost domestic demand, optimize structures and foster new growth drivers.
Zhang Di, chief macroeconomic analyst at China Galaxy Securities, said the equipment and high-tech manufacturing sectors remained the main drivers of industrial profit growth during the first 10 months.
Notably, profits in equipment manufacturing industries surged 7.8 percent year-on-year during the first 10 months, driving overall industrial profit growth to accelerate by 2.8 percentage points. And profits in high-tech manufacturing jumped 8 percent during the same period, 6.1 percentage points higher than the overall industrial profit growth, NBS data showed.
During the first 10 months, profits recorded by manufacturing companies rose by 7.7 percent year-on-year, and profits registered by industrial firms that offer supplies of electricity, heat, gas and water grew by 9.5 percent. Meanwhile, profits recorded by mining firms shrank by 27.8 percent.
In October, China’s industrial profits dipped 5.5 percent versus a 21.6 percent gain in September, according to the NBS.
Zhang noted that production activity was temporarily disrupted by fewer working days last month, while external demand was affected by new export rules. “Despite short-term fluctuations, we believe there is still a solid foundation for profits to maintain a steady upward trend,” Zhang said.
Zhang highlighted two key factors to watch in the coming months,namely the pace of policies aimed at boosting domestic demand as well as the external demand and geopolitical risks.
While the marginal risk of tariff deterioration has eased significantly and China’s ongoing efforts to diversify its export markets are expected to help stabilize external demand, Zhang cautioned that uncertainties remain. “We still need to closely monitor geopolitical tensions and the US Federal Reserve’s rate-cutting path, as they will influence the external environment,” he added.