China's industrial profits continue to see steady growth as economy firms up

A worker operates a robot at a passenger car workshop of Ningde base of SAIC Motor Corporation Ltd. in Ningde, southeast China's Fujian Province, Sept. 15, 2020. (Xinhua/Song Weiwei)

Profits of China's major industrial firms maintained steady recovery in August as the production and operations of enterprises further improved, official data showed on Sunday.

Profits of China's major industrial firms totaled 612.81 billion yuan (about 90 billion U.S. dollars) last month, increasing by 19.1 percent year-on-year, data from the National Bureau of Statistics (NBS) showed.

The growth narrowed 0.5 percentage points from July.

The recovery momentum of industrial profits was further consolidated last month as supply and demand gradually improved, said senior NBS statistician Zhu Hong.

In August, profits of the equipment manufacturing sector reported relatively fast growth, up 23.1 percent year on year, while those of the auto manufacturing industry went up 55.8 percent.

Profits of the mining sector were also apparently restored, while those of the raw materials manufacturing industry saw faster expansion due to improving demand as well as increasing prices of global commodities including crude oil and iron ore.

The profitability of industrial firms improved as operating costs were further reduced, thanks to the implementation of tax and fee cut polices, according to Zhu.

The Chinese economy has withstood the test of the COVID-19 epidemic, with recovery since the second quarter better than expected, said Wang Yiming, national political advisor and former deputy director of the Development Research Center of the State Council.

Without huge impacts from uncertain external factors, the growth of the Chinese economy in the third and fourth quarters will outpace growth in the second quarter, according to Wang.

In the first eight months of the year, the profits of major industrial firms declined 4.4 percent to 3.72 trillion yuan, narrowing 3.7 percentage points from the January-July period.

Profits of state-controlled industrial firms dropped 17 percent from one year earlier to 950.94 billion yuan, while those of private industrial firms shrank 3.3 percent year-on-year to 1.07 trillion yuan.

During the January-August period, profits of the mining industry slumped 38.1 percent, and manufacturing industry profits decreased by 1 percent.

Profits in 16 of the 41 surveyed industrial sectors rose compared with the same period last year, while 25 sectors saw their profits fall, according to the NBS.

However, industrial enterprises still face pressure in maintaining profit growth as January-August revenues and profit growth remained in the negative territory amid a complicated internal and external environment, Zhu said.

Next, China will further tap into the potential of domestic demand, stimulate the vitality of market entities and continuously consolidate the outcomes of economic recovery, according to Zhu.

Major industrial companies are those with an annual business turnover of at least 20 million yuan.