(Bloomberg) — Profits at Chinese industrial companies fell faster in September than a month earlier, as deflationary pressures undermine the strength of corporate finances.
Most read from Bloomberg
Industrial profits of major Chinese companies fell 27.1% last month from a year earlier, after a 17.8% decline in August, the National Bureau of Statistics said in a statement on Sunday. Profits fell by 3.5% in the first nine months compared to the same period in 2023.
The data was “influenced by factors including a high base in the same period last year,” the agency said in a statement.
Industrial profits are an important measure of the financial health of factories, mines and utilities, which could influence their investment decisions in the coming months. Weaker earnings became emblematic of the challenges facing China’s $18 trillion economy, with measures such as interest rate cuts since late September.
The country’s top legislative body will hold a much-anticipated session in Beijing from November 4 to 8, as investors look for some approval of further fiscal stimulus to revive growth.
Economists expect the meeting to confirm a plan to refinance local government debt and issue government bonds to inject capital into banks. Investors have been looking for new stimulus in the form of increased government borrowing and spending, but opinions vary on whether these will materialize this year.
Rising producer price deflation has likely hurt corporate profits, despite faster growth in industrial production, Bloomberg Economics said ahead of the release. Factory prices continued to decline for the 24th straight month in September, with the recent decline accelerating due to weak domestic demand.
China’s economic expansion slowed in the third quarter, despite tentative signs of improvement in September, including better industrial performance and increased consumption. The economy grew 4.6% from a year earlier in the period from July to September, the slowest pace since March 2023.
–With help from Tian Ying.
Most read from Bloomberg Businessweek
©2024 BloombergLP
