China's industrial profit growth picks up amid two-speed economy
BEIJING: China’s industrial profits grew at a faster pace in September, though a deepening divergence across the economy continued to weigh on business earnings. Profits at industrial firms rose 14.4% from a year earlier last month, quickening from a 4.2 increase in August, data from the National Bureau of Statistics showed on Tuesday. Profits were up 15.5% in the first nine months, compared with…
BEIJING - China's industrial profits experienced a notable increase in September, with a growth rate of 14.4% compared to the previous year, marking a significant acceleration from the 4.2% growth observed in August, according to data released by the National Bureau of Statistics on Tuesday. The overall increase in industrial profits for the first nine months of the year reached 15.5%, slightly higher than the 15.7% growth rate in the corresponding period of the previous year.
However, the report highlights that China's economy, which is experiencing a two-speed growth pattern, continues to present challenges for businesses. Export-oriented firms, facing mounting uncertainties due to expanding trade surpluses and potential external pressures, are struggling, while those dependent on domestic demand grapple with declining consumption, casting a shadow over the sustainability of profit growth.
The disparity between sectors is stark. The profits in the computer, communication, and other electronic equipment manufacturing sector surged by an impressive 103.8% in the first nine months, demonstrating the sector's resilience. In contrast, the furniture manufacturing sector suffered a sharp decline of 51.3%, one of the weakest performances and underscoring the uneven nature of China's economy.
China's economy managed to expand by a stronger-than-expected 4.5% in the third quarter, bringing it closer to its annual growth objective of 4.5% to 5.0%. However, the disparities across various sectors indicate that the recovery is far from uniform, with persistent weaknesses in certain areas continuing to undermine corporate profitability.
This pressure is evident at the company level, as exemplified by the sharp slowdown in net profit at CATL, the world's largest electric vehicle battery maker. The company's earnings were severely impacted by intense competition in the EV battery market, which squeezed margins at a time when overall auto sales were declining.
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