China's industrial profits drop 10% in first eight months

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China's industrial profits drop 10% in first eight months

BEIJING :Profits at China's industrial firms extended a double-digit drop for the first eight months, but the pace of declines eased slightly as a flurry of policy support steps has started to stabilise parts of the stuttering economy.

The 11.7 percent year-on-year fall in profits narrowed from a 15.5 percent contraction for the first seven months in line with expectations and potentially suggests a modest recovery is beginning to take root for some businesses.

That was backed up by August earnings, which posted a surprise surge of 17.2 percent from a year earlier, the National Bureau of Statistics said on Wednesday. The company's earnings were down 6.7 percent in July.

NBS statisticsian Yu Weining said last month that 'a series of policies to promote macroeconomic recovery' last month underpinned earnings.

In the period, profits improved for 30 of 41 major industrial sectors, with the losses in the raw material manufacturing industry narrowing significantly due to rising commodity prices and recovered demand. NBS did not provide comparison data for January-July.

While Beijing steps up policy support for its struggling economy after a brief post-COVID recovery, recent data have shown signs of stabilization, including stronger-than-expected bank lending, industrial output and retail sales growth for August.

The crisis-hit property sector, which accounts for one-fourth of the world's second largest economy, is still a drag on growth.

In September, China's new-home prices fell at the fastest rate in 10 months. Eased borrowing regulations are showing signs of boosting new home sales in some major cities such as Beijing, but worries remain that the improvement may be short-lived.

The uncertainty about confidence in the real estate sector could have a negative impact on the overall demand outlook for businesses and the economy.

The NBS data revealed that there was still some way to go for a robust recovery in overall earnings growth.

In the first eight months, profits fell 3.8 per cent for state-owned firms and 1.3 per cent for foreign firms, while private-sector companies saw earnings drop 6.1 per cent.

Industrial profit figures cover firms with annual revenue of at least 20 million yuan from their main operations.