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Industrial profits post fast growth

By Ouyang Shijia | chinadaily.com.cn | Updated: 2025-10-27 23:26
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China's industrial profits grew at its fastest pace in nearly two years in September, official data showed on Monday, as policy measures to rein in rat-race competition helped ease pressure on manufacturers despite lingering domestic and external headwinds.

Analysts attributed the rebound in corporate profitability to firmer prices and resilient industrial output, supported by Beijing's pro-growth policies, pointing to a stabilizing economy buoyed by the strong performance of the new quality productive forces.

Looking ahead, they expect the recovery momentum to extend into the fourth quarter, with policymakers likely to intensify countercyclical adjustments to boost domestic demand, spur market confidence and reinforce internal growth drivers — keeping China on track to meet its full-year growth target.

China's industrial enterprises with an annual revenue of at least 20 million yuan ($2.8 million) saw their total profits soar 21.6 percent year-on-year in September, following a 20.4 percent jump in August, marking the largest gain since November 2023, data from the National Bureau of Statistics showed on Monday.

During the first nine months of the year, profits at major industrial companies grew to 5.37 trillion yuan, a year-on-year increase of 3.2 percent, following a 0.9 percent rise in the first eight months.

Wen Bin, chief economist at China Minsheng Bank, said: "The strong growth in September's industrial profits was largely driven by a low base from last year, combined with stabilizing production, easing price pressures and improving profit margins."

NBS data showed China's industrial output surged 6.5 percent year-on-year in September after a 5.2 percent rise in August, marking the first acceleration in three months.

Meanwhile, China's producer price index — which measures factory-gate prices — fell 2.3 percent year-on-year in September, easing from a 2.9 percent drop in August.

Wen also noted that "structural bright spots are a key part of the rebound in corporate profitability", underpinned by the robust performance of high-tech manufacturing and equipment manufacturing sectors.

According to the NBS, profits in high-tech manufacturing industries surged 26.8 percent in September, driving overall industrial profit growth to accelerate by 6.1 percentage points.

For the first nine months, profits in equipment manufacturing industries soared 9.4 percent, contributing 3.4 percentage points to overall profit growth.

Citing the faster profit growth among private sector and foreign companies, Wen said that it indicates market expectations are improving, and business confidence is recovering.

Looking ahead, he said the fourth quarter will likely see steady growth in industrial profits with the government's effective measures to curb involution competition, easing price pressures and improving corporate profitability.

In the communique of the fourth plenary session of the 20th Central Committee of the Communist Party of China, which was released on Thursday, policymakers called for "resolutely achieving the economic and social targets set for this year", suggesting they will ensure GDP growth will reach the "around 5 percent" growth target.

Lu Ting, chief China economist at Nomura, said he expects the country to refocus on short-term growth stability. "Beijing just needs around 4.2 percent GDP growth in the fourth quarter to deliver that target. So, from a statistics perspective, it's easily within reach," he said.

The best strategy is to resist the temptation to fuel the stock markets by avoiding too high-profile monetary measures in the near term, remaining vigilant by avoiding contractionary policies, cleaning up the property market problem, and addressing some deep-rooted problems such as the unequal social security system, Lu said.

A report released by the Chinese Academy of Social Sciences' Institute of Finance & Banking on Monday noted that insufficient effective demand remains a prominent challenge.

Against the backdrop of US-China trade friction and profound structural economic shifts, the report said China should advance macroeconomic governance system innovation that addresses both existing structures and new growth drivers, with a focus on enhancing policy efficacy.

"In the short term, macro policies should be proactively strengthened, including more forceful fiscal spending tilted toward consumption stimulation, utilizing the room for interest rate cuts and reserve requirement ratio reductions created by the US Federal Reserve's move, and implementing multi-pronged measures to stabilize the property market and foster its high-quality development," said Wang Qing, assistant researcher at the institute.

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