China’s industrial profits jump 21.6% in September, biggest jump in nearly two years

China’s industrial profits jumped 21.6% in September from a year earlier This was announced on Monday by the National Bureau of Statisticsas Beijing’s campaign to curb price wars helped ease pressure on manufacturers despite persistent trade tensions with the US

That sharp jump, continuing a strong recovery that began in August when industrial profits jumped 20.4% year-on-year, marked the biggest increase since November 2023.

In the first nine months of the year, profits at major industrial firms rose 3.2 percent, official data showed, accelerating from 0.9% growth in the January-August period.

The recovery in corporate profitability was largely helped by Beijing’s policies aimed at curbing fierce price competition in industrial sectors as producer price deflation entered its third year.

of China consumer prices fell more than expected in September, down 0.3% from a year earlier, while the producer price index fell 2.3%.

Profits for the manufacturing sector jumped 9.9% from a year earlier in the January-September period, and profits from electricity, heat, fuel and water supply companies rose 10.3%. However, the mining sector reported a 29.3% drop in profits.

Yu Wenning, chief statistician at the NBS, said high-tech manufacturing helped drive broader earnings growth, with the sector’s profits jumping 26.8 percent in September.

Among industrial firms, profits of state-owned enterprises fell 0.3 percent, compared with gains of 4.9 percent for foreign industrial firms – including those with investment from Hong Kong, Macau and Taiwan – and 5.1 percent for private companies.

Chinese manufacturers have weathered uncertain trade policies with the United States and tepid consumer confidence at home as the world’s second-largest economy grapples with a prolonged housing slump, weak labor market conditions and growing headwinds for its exports.

While the country’s overall exports have held steady this year, analysts expect trade growth to slow in the final quarter, partly due to last year’s high base.

“We expect export growth to slow in the fourth quarter, after increasing to 6.6% year-on-year in the third quarter from 6.2% in the second quarter, due to a high base and rising trade barriers globally,” said a team of economists at Nomura.

China’s economy increased by 4.8% in the third quartermarking the slowest pace in a year. Investment in fixed assets unexpectedly shrank 0.5% in the first nine months of the year – the first such decline since 2020 during the pandemic – according to 1992 data from Wind Information.

Industrial production rose faster than expected in September, rising 6.5% from a year earlier and up from 5.2% growth in the previous month.

The robust headline numbers suggest Beijing may not see much urgency in introducing more stimulus measures to meet its growth target of around 5 percent this year, analysts said.

While Chinese politicians promised to stimulate domestic demand at a high-level meeting on economic planning earlier this month, they also stressed the need for technological breakthroughs and to upgrade the country’s industrial capacity.

“References to ‘expanding domestic demand’ and ‘improving livelihoods’ are present but relatively less prominent,” said Louise Lu, head of Asia economics at Oxford Economics.

“They suggest that while policymakers recognize weak household sentiment and the overhang of savings, they do not foresee a large-scale stimulus to consumption over the next five years,” Lu added.