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Profits at China’s industrial companies registered their steepest decline this year in September, as policymakers battle to restore confidence across the world’s second-biggest economy.
Profits at large industrial companies fell by 27.1 per cent in September year-on-year, after a 17.8 per cent fall in August. The gauge, which is published by the National Bureau of Statistics, tracks firms with more than Rmb20mn ($2.8mn) in turnover.
The figures come amid mounting pressure on Beijing to support the economy after a string of disappointing data that highlight the effects of a multiyear property slowdown and weaker consumer demand.
Policymakers in late September unveiled a barrage of measures designed to boost confidence and support the stock and housing markets, though analysts have called for further fiscal stimulus to restore momentum.
China’s National People’s Congress standing committee will meet from November 4-8, an event that will be closely watched for any updates on the government’s spending plans.
Beijing has set a target of about 5 per cent for GDP growth this year, its joint-lowest target in decades. GDP expanded 4.6 per cent in the third quarter year-on-year, according to figures released this month.
Consumer prices remain close to deflationary territory in China, rising just 0.4 per cent last month, while producer prices declined 2.8 per cent. The producer price index, which tracks factory gate prices and is heavily driven by the price of commodities, has been in negative territory for the past two years.
In an accompanying statement, the NBS said that the fall in ex-factory prices had put “great pressure” on corporate profits and revenues, and also cited “insufficient” demand.
Analysts at Goldman Sachs noted that profits in downstream industries, which are closer to the consumer, were essentially flat compared with pre-Covid levels.
Xi Jinping’s government has heavily emphasised the need to upgrade its manufacturing and production this year, in everything from clean energy to AI. The NBS said that profits at high-tech industries have expanded 6.3 per cent so far this year, compared with the same period last year.