Chinese industrial profits continue to improve in July, as growth reinforcing policies are implemented
Published: Aug 27, 2023 02:55 PM Updated: Aug 27, 2023 08:48 PM
industrial profits

industrial profits

Chinese industrial enterprises reported smaller profit declines in July compared with June, indicating the overall manufacturing sector is steadily improving with the country's sustained efforts to shore up economic recovery, the National Bureau of Statistics (NBS) said on Sunday.

The combined profits of industrial firms with yearly business revenues of at least 20 million yuan ($2.82 million) fell 6.7 percent year-on-year to 556.1 billion yuan, marking an improvement from the 8.3 percent drop in June, NBS data showed.

Gross profits reached 3.94 trillion yuan in the first seven months, a decline of 15.5 percent year-on-year, which was 1.3 percentage points less than the January-June reading.

In the first seven months, among the 41 industrial categories, profits rose for 13 categories but fell for 28 others, the NBS data showed.

Relatively weak demand especially from the overseas market due to the downward impact of the global economy and US interest rate hikes has weakened the country's industrial product sales. Meanwhile, prices of many upstream raw materials were volatile, which limited the profitability of industrial enterprises, Wang Peng, an associate research fellow at the Beijing Academy of Social Sciences, told the Global Times on Sunday.

With the implementation of support policies in recent months and the improvement of supply and demand, the cumulative decline in profits has been narrowed month-on-month since the beginning of the year. 

In the first seven months, the year-on-year decline in the profits of state-owned enterprises narrowed by 0.7 percentage points compared with the January-June period. The decline in the profits of private enterprises narrowed by 2.8 percentage points, while the decline for foreign-, Hong Kong-, Macao- and Taiwan-funded enterprises narrowed by 0.4 percentage points.

These figures indicate that the confidence of the domestic market in investment and consumption is gradually recovering after the implementation of policies, especially efforts to support the private economy, which further restored market confidence and expanded domestic demand, Wang noted.

Besides, equipment manufacturers saw combined profits in the January-July period rise 1.7 percent, according to the NBS.

From January to July, the electronics and machinery sector, driven by photovoltaic equipment, lithium-ion batteries, household air conditioners and other products, saw profit growth of 33.7 percent.

The profit growth of the railroad, ship and aerospace transportation equipment sector reached 30.4 percent, boosted by products including shipbuilding and marine engineering equipment.

"Overall, industrial enterprise profits continue to improve. We will continue to ratchet up efforts to implement growth-reinforcing policies, focusing on expanding effective market demand, in a bid to boost market confidence, stimulate the vitality of the majority of industrial enterprises and make sure the manufacturing sector keeps on rebounding," NBS statistician Sun Xiao said in a statement on the bureau's website.

Chinese authorities have rich policy toolkits at their disposal and have rolled effective policies targeted at businesses and consumers, in a bid to further boost the economy recovery.

On July 19, China issued a guideline on boosting the growth of the private economy, highlighting that it will ensure that enterprises of different ownership will operate in an arena of fair competition and be protected by the laws equally.

On July 31, Chinese authorities issued 20 measures to boost domestic consumption, including support for expanding real estate and auto sales. 

"As the related policies continue to take effect and market confidence maintains a recovery, I believe that the profits of industrial enterprises will continue to return to the right track," Wang noted.