BEIJING: China’s industrial profits grew at a faster pace in September, though a deepening divergence across the economy continued to weigh on business earnings.
Profits at industrial firms rose 14.4% from a year earlier last month, quickening from a 4.2 increase in August, data from the National Bureau of Statistics showed on Tuesday.
Profits were up 15.5% in the first nine months, compared with a 15.7% increase in the January-August period.
While export-oriented firms brace for greater uncertainty as expanding trade surpluses heighten the risk of external pressures, firms tied to domestic demand continue to grapple with subdued consumption, casting a shadow over the sustainability of profit growth.
The sectoral divide remained pronounced. Profits in the computer, communication, and other electronic equipment manufacturing category soared 103.8% in the first nine months, whereas the furniture manufacturing sector posted a 51.3% decline, making it one of the weakest performers and highlighting the uneven nature of China’s economy.
A stronger-than-expected 4.5% expansion in the third quarter put China within reach of its annual growth target of 4.5% to 5.0%, but disparities across different parts of the economy suggest the recovery remains unbalanced, with persistent weakness in some sectors continuing to erode corporate profitability.
That pressure has become increasingly visible at the company level. Net profit at the world’s largest electric vehicle battery maker, CATL, slowed sharply in the past quarter, as intense competition in the EV battery market squeezed margins at a time when China’s auto sales were in a downturn.
Industrial profit figures cover firms with yearly revenue of at least 20 million yuan ($3.0 million) from main operations.