China’s industrial profits extend slump but pace of downturn eases

Workers wearing face masks following the coronavirus disease (COVID-19) outbreak load steel products for export to a cargo ship at a port in Lianyungang, Jiangsu province, China May 27, 2020. China Daily via REUTERS/File photo

BEIJING  – Profits at China’s industrial firms extended a double-digit drop for the first eight months, but the pace of declines eased slightly as a flurry of policy support steps has started to stabilize parts of the stuttering economy.

The 11.7 percent year-on-year fall in profits narrowed from a 15.5-percent contraction for the first seven months, in line with expectations and potentially suggests a modest recovery is starting to take root for some businesses.

READ: China August industrial output, retail sales growth beat expectations

That was backed up by August earnings posting a surprise surge of 17.2 percent from a year earlier, data from the National Bureau of Statistics (NBS) showed on Wednesday. Profits were down 6.7 percent in July.

As Beijing steps up policy support for its faltering economy after a brief post-COVID recovery, recent data have shown signs of stabilization with stronger-than-expected bank lending, industrial output and retail sales growth for August.

READ: China to step up policy adjustments amid tortuous recovery

Still, persistent weakness in the crisis-hit property sector that accounts for one-fourth of the world’s second largest economy remains a drag on growth.

Last month, China’s new home prices fell at the fastest pace in 10 months. Eased borrowing rules are showing signs of providing some major cities like Beijing a boost in new home sales, but concerns remain that the improvement might be short-lived.

Industrial profit numbers cover firms with annual revenues of at least 20 million yuan ($2.75 million) from their main operations.