Chinese Industries see Increased Profits Post Policy Implementation

The industrial firms in China experienced a continued increase in profits for the second consecutive month in September. This further demonstrates the signs of an economy that is starting to stabilize, especially as the authorities implemented a series of supportive policy measures. In a surprising turn of events, the YoY increase of 11.9 percent was driven by an unexpected upswing of 17.2 percent in August. This positive trend comes after the robust performance of both industrial and consumption sectors in September, surpassing earlier predictions.

According to data released by the National Bureau of Statistics (NBS) on Friday, profits in the first nine months experienced a 9 percent decrease compared to the previous year. This indicates an improvement from the 11.7 percent decline observed in the first eight months. According to Yu Weining, a statistician from the NBS, industrial profits experienced a gradual recovery quarter after quarter. They rebounded from declines in the previous two quarters and achieved a growth rate of 7.7 percent during the July-September period.

According to analyst Zhou Maohua from China Everbright Bank, the September figures indicate a general enhancement in the functioning of the domestic industrial sector and an ongoing revival in market demand. Zhou also mentioned that the decrease in year-on-year growth is attributed to a strong base established last year.

According to Zhou, a decline in producer prices in the previous month suggested that certain industrial companies were continuing to reduce expenses in order to boost sales. This, in turn, had a negative impact on industrial revenues and profits as a whole. He added that the sustained improvement in industrial profits in the coming months is expected, partly because of the lag effect in domestic macro pump-priming.

China's blue-chip CSI300 Index started the day with a decline but managed to bounce back and ended up gaining 0.6 percent.