In September, China’s industrial companies posted profit contractions for the second month in a row with producer prices resuming its dip, underlining the toll of the slowing economy and the trade war with the US on corporate balance sheets.
According to the National Bureau of Statistics (NBS), year-on-year, industrial profits slumped by 5.3% to CNY575.6 billion (USD81.48 billion), compared to the 2% year-on-year decline in August.
For the January-September period, Chinese industrial companies earned profits of CNY4.59 trillion (USD649.9 billion), down by 2.1% year-on-year due to the declining ex-factory price of industrial products, and the slowdown in sales growth.
Factory gate prices dropped the steepest in more than three years as the third-quarter economic growth hit a fresh near 30-year low. Industrial companies’ liabilities soared by 5.4% year-on-year to CNY66.49 trillion (USD9.4 trillion), compared to a 5.0% increase in August. Profits of private companies rose by 5.4% in the January-September period, slowing from the first eight months’ 6.5% growth.
State-owned companies also showed a fall in profits, by 9.6% in the first nine months of the year. The oil, coal, and other fuel processing industries posted a 53.5% fall in profits.
However, industrial production growth which indicating the domestic manufacturing demand posted a contrast with the decline in profits.
US and China trade negotiators are working on finalizing the Phase 1 of a trade deal for both countries’ presidents to sign.
