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Despite sustained pressure from economic slowdown amid weak demand, profits of China’s large-scale industrial enterprises surged by 20.4% year-on-year (YoY) in August, reversing the downward trend of recent months. This indicates that the authorities’ measures to address overcapacity and excessive competition are taking effect.
On Saturday (September 27), China’s National Bureau of Statistics (NBS) announced on its official website that from January to August, the total profits of China’s large-scale industrial enterprises reached 4.69 trillion yuan (RMB, 下同；approximately 850.1 billion Singapore dollars), registering a YoY growth of 0.9%. This performance outperformed Bloomberg’s expected decline of 1.6% and reversed the sustained downward trend in cumulative corporate profits since May.
Large-scale industrial enterprises refer to those with annual main business revenue of 20 million yuan or more.
Data shows that China’s industrial enterprise profits in August turned from a 1.5% YoY decline in the previous month to a sharp increase of 20.4%. This marks the first growth in four months and the highest rate since November 2023.
When interpreting the data, Yu Weining, Chief Statistician of the Industry Department of the NBS, stated that driven by multiple factors—including the effective implementation of macro policies, the advancement of a unified national market, and the low base effect from the same period last year—profits of enterprises of all sizes have improved.
Yu noted that in the face of a severe and complex external environment and still insufficient domestic demand, the next stage should focus on further expanding domestic demand, advancing the construction of a unified national market, and standardizing corporate competition order to create more favorable conditions for the sustained recovery of industrial enterprise profits.
According to a report by China Business News, Wen Bin, Chief Economist of Minsheng Bank, analyzed that with the continuous advancement of "anti-involution" governance and the gradual improvement of market competition order, industrial enterprise profits are expected to maintain a moderate recovery trend, with cumulative growth rates rising steadily.
Combined reports from Reuters and Bloomberg indicate that against the backdrop of China’s vigorous efforts to tackle overcapacity, the official Producer Price Index (PPI) for industrial products in August—released earlier—fell by 2.9% YoY. The decline narrowed compared with July, marking the first easing of deflationary pressure in factories in six months.
However, the sustained slowdown in China’s value-added of large-scale industries may offset the positive effects of corporate profit growth. The growth rate of total retail sales of consumer goods in August also slowed for the third consecutive month, dropping to the lowest level since December last year. This suggests that a strong recovery in demand remains difficult to achieve amid the ongoing downturn in the real estate sector and weak job market.
Since the third quarter, China’s economic growth has continued to cool down. The weakening momentum of infrastructure investment may further reduce demand for key industrial products such as steel and cement. |
