September saw advances at China’s industrial companies continue for a second month, adding to indications of a stabilising economy as the government implemented a flurry of pro-business policy initiatives.

The unexpected 17.2% increase in August and September’s higher-than-expected industrial and consumer activity led to the 11.9% year-over-year increase.

Profits fell 9% in the first nine months compared to the same period last year, which was less than the 11.7% drop in the first eight months, according to statistics released on Friday by the National Bureau of Statistics (NBS).

Industrial earnings bounced back after two quarters of decreases to a 7.7% gain in the July-September period, according to an accompanying statement by NBS statistician Yu Weining.

Zhou Maohua, an analyst at China Everbright Bank, stated that the September figure shows an overall improvement in domestic industrial sector operations and a continuous recovery in market demand. She added that the high base from the previous year was the reason for the decrease in year-over-year growth.

According to Zhou, a decline in producer prices last month suggested that certain businesses in the industry were still lowering prices to boost sales, which had a negative impact on overall industrial revenues and profits.

He said, citing the lag effect in domestic macro pump-priming as one of the reasons why the recovery in industrial profitability is anticipated to continue in the upcoming months.

The blue-chip CSI300 Index in China increased by 0.6% following a lower opening in the morning session.

The second-biggest economy in the world has stabilised, according to a string of recent data. It had expanded at a quicker rate than anticipated in the third quarter after seeing a sharp decline in momentum after a brief post-COVID rebound.

The stability is credited by analysts to a number of governmental initiatives implemented in the last several months, although the economy and business profits are still significantly hampered by the crisis-ridden real estate market’s ongoing weakness.

The massive Chinese battery manufacturer CATL revealed last week that its third-quarter profit growth had slowed dramatically, making it its worst since the beginning of the year due to fierce competition and declining demand.

Following the release of third-quarter GDP figures, China’s central bank governor, Pan Gongsheng, made his first policy statements and pledged to support the country’s economic recovery, emphasising the need to reduce financial risks while increasing domestic demand.

An analysis of the NBS data shows that during the first nine months, state-owned companies experienced an 11.5% loss in earnings, while foreign companies experienced a 10.5% decline and private sector companies suffered a 3.2% decline.

Businesses with yearly revenues from their primary operations of at least 20 million yuan ($2.73 million) are included in the industrial profit figures.

(Adapted from Bloomberg.com)

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