China's industrial profit growth picks up amid two-speed economy

BEIJING: China’s industrial profits grew at a faster pace in September, though a deepening divergence across the ​economy continued to weigh on business earnings.

Profits at industrial ‌firms rose 14.4% from a year earlier last month, quickening from a 4.2 increase in August, data from the National Bureau of Statistics showed on Tuesday.

Profits were up ​15.5% in the first nine months, compared with a 15.7% ​increase in the January-August period.

While export-oriented firms brace for ⁠greater uncertainty as expanding trade surpluses heighten the risk of external ​pressures, firms tied to domestic demand continue to grapple with subdued ​consumption, casting a shadow over the sustainability of profit growth.

The sectoral divide remained pronounced. Profits in the computer, communication, and other electronic equipment manufacturing category ​soared 103.8% in the first nine months, whereas the furniture manufacturing sector posted ​a 51.3% decline, making it one of the weakest performers and highlighting the ‌uneven ⁠nature of China’s economy.

A stronger-than-expected 4.5% expansion in the third quarter put China within reach of its annual growth target of 4.5% to 5.0%, but disparities across different parts of the economy suggest the recovery remains ​unbalanced, with persistent ​weakness in ⁠some sectors continuing to erode corporate profitability.

That pressure has become increasingly visible at the company level. Net ​profit at the world’s largest electric vehicle battery ​maker, CATL, slowed ⁠sharply in the past quarter, as intense competition in the EV battery market squeezed margins at a time when China’s auto sales were ⁠in ​a downturn.

Industrial profit figures cover firms ​with yearly revenue of at least 20 million yuan ($3.0 million) from main operations.