Industrial profits up 19% in August as policies take effect

By Yin Yeping Source: Global Times Published: 2020/9/27 19:58:40

industrial profits

The profits of industrial enterprises above a designated size in August reached 612.81 billion yuan ($89.8 billion), up 19.1 percent year-on-year, as production and operation returned to normal and the supply-demand cycle improved thanks to government policies to stabilize and support the recovery.

The National Bureau of Statistics (NBS) said on Sunday that from January to August, the total profits of industrial enterprises above a designated size reached 3.71 trillion yuan. Although that was down 4.4 percent year-on-year, the decline narrowed by 3.7 percentage points from January to July.

Some industries reported higher profits, among which the most significant was the computer, communication and electronic equipment manufacturing industry. Total profits made by the sector increased by 26.1 percent, highlighting China's rapid development in the technology field in the post-epidemic era.

In addition, the growth rate of special equipment manufacturing industry reached 22.9 percent and the growth rate of agricultural and related food processing industry reached 17.7 percent, driven by market demand.

Profits for the equipment manufacturing industry maintained rapid growth, with the amount of enterprise profits grew, which also contributed to the recovery.

Senior NBS statistician Zhu Hong attributed the improvements in August to the implementation of pandemic prevention and control efforts, and the government's economic policies.

The increase in profits was mainly driven by the stable recovery of production and demand, continuous decline in unit costs, and significant recovery in mining profits and accelerated growth in raw material manufacturing profits, Zhu said.

In August, with major achievements made in the prevention and control of the pandemic in China, the implementation of support policies become increasingly effective, experts said. And, China's industrial recovery is of great importance not only to the nation itself but also to the world economy.

Although the recovery of industrial enterprises' profits further consolidated in August, Zhu noted that operating income and profits still declined from January to August, and accounts receivable continued to grow.

Dong Dengxin, director of the Finance and Securities Institute at Wuhan University of Science and Technology, told the Global Times on Sunday that the impact of the epidemic has had a lag effect, which explained why growth has yet to resume.

"In the first half of the year, enterprises above a designated size, especially those in the medical sector, greatly expanded production capacity and inventories. Meanwhile, the epidemic was brought under effective control in the third quarter, and these companies could be facing a drop in revenue as demand shrinks," said Dong.

At the same time, due to the complex and volatile environment at home and abroad, corporate profits remain under pressure.

But overall, Dong said that companies affected by the outbreak have gradually been recovering in the third quarter, and China's economy will continue to grow well into the fourth quarter.

In the next stage, China will continue to focus on supply-side structural reform, further tap the potential of domestic demand, stimulate the vitality of market players, and focus on unimpeded supply and demand cycles, the report said.

"By the fourth quarter, corporate profits will most likely return to year-earlier levels," predicted Dong.


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