Major Chinese industrial firms saw their profits surge for the fifth straight month, National Bureau of Statistics (NBS) data shows, as the world’s second largest economy continues to recover from the coronavirus crisis.
In September, industrial profits of large Chinese enterprises increased 10.1 percent compared with a year earlier, hitting 646.43 billion yuan (about $96.5 billion).However, profit growth slowed its pace compared to August, when it surged by over 19 percent year-on-year. The statistics agency explained that it was due to changes in industrial product prices and rising expenses, as well as the narrowing of profit growth in electronics and auto industries.
The July-September quarter still marked a firm recovery in the manufacturing sector, which was hit hard by the coronavirus outbreak at the beginning of the year. Profits of China’s largest industrial firms dropped by more than a third between January and March, when lockdowns paralyzed economic activity. The trend changed after the economy started to reopen, with the industrial profits growing by 4.8 percent in the second quarter and finishing the third quarter with 15.9 percent growth.However, the growth seen in the five months of May through September has not reversed the downward trend for the whole year. According to the NBS, in the first nine months of the year, industrial firms’ profits fell 2.4 percent on an annual basis to 4.37 trillion yuan. More than half of industrial sectors still saw profits rise year-on-year over that period.
“Although the profits of industrial enterprises continued to recover steadily in the first three quarters, the accumulative operating income and profits [in the first nine months] have not returned to growth, while the increase rates of accounts receivable and finished goods inventory were still high, meaning the foundation for continued improvement in industrial profit still needs to consolidate,” senior official at the NBS, Zhu Hong, said.Unlike most major economies, China has continued to recover from the impact of the global pandemic. In the third quarter, the Chinese economy expanded by 4.9 percent. China is expected to become the only major economy to secure full-year growth, with the International Monetary Fund (IMF) expecting it to expand by nearly two percent in 2020.For more stories on economy & finance visit DHT’s business section