China’s industrial profits grow 4.3% in the first quarter

Growth occurs amid increased demand and new growth drivers.

Profits at China’s top industrial companies rose 4.3% year on year in the first quarter of 2024, reversing a 2.3% decline recorded in 2023, as market demand supported the recovery trend amid intensification of macro policies, official data showed on Saturday.

Industrial enterprises with an annual core business revenue of at least 20 million yuan ($2.82 million) saw their combined profits reach 1.51 trillion yuan during the first three months, an increase of 4.3 percent in compared to the previous year, data released by the National Department of Statistics showed. .

During the same period, state-owned holding companies made a total profit of 573.82 billion yuan, a year-on-year decrease of 2.6%, while private companies made a total profit of 368 billion yuan, an increase of 5. 8%. Foreign-funded companies from Hong Kong, Macau and Taiwan made a total profit of 373.75 billion yuan, an increase of 18.1 percent, the data showed.

On a quarterly basis, profits at China’s top industrial companies saw third-quarter growth in the first three months of the year, prolonging a recovery trend, said Yu Weining, a statistician at the NBS.

“The gradual recovery of market demand and the rapid development of new growth engines further drive the recovery of corporate revenues,” Yu said.

According to the NBS, revenues of major industrial companies in China grew 2.3% year on year in the first quarter, 1.2 percentage points above the growth rate recorded last year, creating favorable conditions for sustained recovery of business profits.

Thanks to the development of new quality productive forces, high-tech manufacturing companies reported rapid profit growth during the period, Yu said. NBS data showed that profits in the high-tech industrial sector increased by 29.1% year-on-year between January and March, compared with an 8.3% year-on-year decline seen last year. It is worth noting that the communications equipment industry’s profits increased 3.47 times in the first three months.

The equipment manufacturing industry’s profits saw remarkable growth during the period as new industrialization continues to be driven, Yu said, noting that the industry’s profits rose 18 percent year on year in the first quarter, serving as a stepping stone ballast. .
Specifically, the profits of the electronics industry increased by 82.5% year on year and those of the automobile industry increased by 32%, becoming the two manufacturing industries that contributed the most to the profits of China’s major industrial enterprises, according to the NBS.

Chinese companies’ measures to reduce costs and increase efficiency, coupled with macro policies to stabilize economic growth, have effectively revived market entities’ expectations and will continue to boost their profit growth during the rest of 2024, said Chen Fengying, economist and former director of the Institute of World Economic Studies at the China Institutes of Contemporary International Relations, told the Global Times on Saturday.

Currently, the A-share market is increasingly stabilized, which will provide a boost to direct corporate financing. Furthermore, the development of new quality productive forces and emerging industries will facilitate the transformation and modernization of traditional industries, Chen said, noting that new growth engines will play a more important role in facilitating the industrial economy.

Chen expressed full confidence in China’s ability to achieve the pre-defined annual GDP target of around 5% this year, following the release of a better-than-expected GDP growth rate in the first quarter of 5.3% in terms annually.

So far, authorities have announced multiple supportive policies, including an action plan to promote large-scale renewable equipment and trade in consumer goods. The key is to implement these policies and measures accurately, carry out in-depth reforms in key areas and industries, and improve the business environment, so as to lay a solid foundation for achieving this year’s development goals, Chen said.

Article via Global Times.