China’s industrial profits rise 14.4pc in September as economy splits

BEIJING: Profits at China's industrial firms grew at a faster pace in September, though a widening divide across the economy continued to weigh on business earnings, official data showed on Tuesday.

According to the National Bureau of Statistics, profits rose 14.4 per cent from a year earlier last month. This compared with an increase of 4.2 per cent in August.

Profits were up 15.5 per cent in the first nine months of the year. The rise in the January-August period was 15.7 per cent.

The figures cover firms with yearly revenue of at least 20 million yuan ($3.0 million) from main operations.

The gap between sectors remained wide. Profits in the computer, communication and other electronic equipment manufacturing category jumped 103.8 per cent in the first nine months. The furniture manufacturing sector posted a 51.3 per cent decline, making it one of the weakest performers.

According to Reuters, export-oriented firms are bracing for greater uncertainty as expanding trade surpluses raise the risk of external pressure. Firms tied to domestic demand continue to struggle with subdued consumption. This casts a shadow over whether profit growth can be sustained.

The economy expanded by 4.5 per cent in the third quarter, which was stronger than expected. That puts China within reach of its annual growth target of 4.5 to 5.0 per cent. However, the disparities between sectors suggest the recovery remains unbalanced. Persistent weakness in some sectors continues to erode corporate profitability.

The pressure has also shown at company level. Net profit at CATL, the world's largest maker of electric vehicle batteries, slowed sharply in the latest quarter. Intense competition in the EV battery market squeezed margins at a time when China's auto sales were in a downturn.