BEIJING: China’s industrial profits plunged in September, recording the steepest monthly decline of the year, official data showed on Sunday, as policymakers ramp up stimulus to revitalise economic growth.
Profits in September fell 27.1% from a year earlier, following a 17.8% fall in August, while earnings slipped 3.5% in the first nine months versus a 0.5% rise in the January-August period, according to the National Bureau of Statistics (NBS).
The slump in industrial profits in September was due to factors such as insufficient demand and a sharper decline in producer prices, and a significantly higher base of comparison since August, NBS statistician Wei Ning said.
But recently unveiled policy measures will “foster a favourable environment for the production and operation of industrial enterprises, supporting the recovery and improvement of their profits”, Wei said in a statement.
China’s economy grew at the slowest pace since early 2023 in the third quarter, with the crisis-hit property sector showing few signs of steadying as Beijing races to revitalise growth.
Recent data also pointed to increased deflationary pressures, softer export growth and subdued loan demand, raising red flags over the economic recovery and strengthening the case for fiscal stimulus to galvanise growth.
Highlighting the business impact of price cuts and weak demand, profit at China’s auto industry tumbled 21.4% year-on-year to 30.5 billion yuan in August, data from the China Passenger Car Association showed.
The authorities have sharply ramped up policy stimulus, including interest rate cuts, since late September to ensure growth will reach Beijing target of around 5% this year.
China’s finance minister has vowed more fiscal stimulus to revive the faltering economy, without giving a dollar figure for the package, following the central bank’s announcement late last month of the most aggressive monetary support measures since the pandemic.
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The size of the expected fiscal package has been the subject of intense speculation in financial markets. Earlier this month, local media outlet Caixin Global reported, citing sources with knowledge of the matter, that China may raise 6 trillion yuan ($842.7 billion)from special treasury bonds over three years to stimulate a sagging economy.
China’s top legislative body will meet from Nov. 4-8, state news agency Xinhua said last week, but gave no detail of the agenda of highly anticipated debt and other fiscal measures.
State-owned firms recorded a 6.5% drop in profits in January-September, foreign firms’ earnings rose 1.5%, while private-sector companies posted a 0.6% decline, according to a breakdown of NBS data.
Industrial profit numbers cover firms with annual revenues of at least 20 million yuan ($2.8 million) from their main operations.
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