China’s industrial profits fell sharpest in a year in September

China’s industrial profits fell sharply in September, official data showed on Sunday, recording their steepest monthly decline of the year, as policymakers step up stimulus to revive economic growth.

Profits in September fell 27.1% from a year earlier, after falling 17.8% in August, while profits fell 3.5% in the first nine months, according to the National Bureau of Statistics (NBS). with an increase of 0.5% between January and August. ).

The fall in industrial profits in September was caused by factors including insufficient demand and a sharper decline in producer prices, as well as a significantly higher comparison base from August, said NBS statistician Wei Ning.

But the newly announced policies will “contribute to creating a favorable environment for the production and operation of industrial enterprises, promoting recovery and increasing their profits,” Wei said in a statement.

China’s economy grew at its slowest pace since early 2023 in the third quarter, with the crisis-hit property sector showing few signs of stabilizing as Beijing seeks to revive growth.

The latest data also points to rising deflationary pressures, slowing export growth and weaker credit demand, raising alarm bells for the economic recovery and strengthening the case for fiscal stimulus to boost growth.

Chinese auto industry profits fell 21.4% year-on-year to 30.5 billion yuan in August, highlighting the impact of lower prices and weak demand on business, according to the China Passenger Car Association.

Since late September, authorities have sharply stepped up stimulus measures, including interest rate cuts, to ensure economic growth this year reaches Beijing’s target of around 5%.

China’s finance minister vowed more fiscal stimulus to revive the ailing economy, without giving a dollar figure for the package, after the central bank announced late last month its most aggressive monetary support measures since the pandemic.

The size of the expected budget package has been the subject of intense speculation in financial markets.

Earlier this month, local media outlet Caixin Global reported, citing people familiar with the matter, that China could raise 6 trillion yuan ($842.7 billion) through special Treasury bonds over three years to boost the flagging economy.

China’s top legislature will meet Nov. 4-8, state news agency Xinhua reported last week, but gave no details on the agenda for long-awaited debt and other fiscal measures.

According to NBS data, state-owned companies recorded a 6.5% decline in profits in January-September, foreign firms’ earnings rose 1.5%, and private sector companies reported a 0.6% decline.

Industrial profit data covers firms with annual revenue of at least 20 million yuan (US$2.8 million) from their main activities.