China's industrial profits have fallen as the economy slows

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Profits at China's industrial companies fell the most in September this year, as policymakers struggle to restore confidence in the world's second-largest economy.

Profits at large industrial companies fell 27.1 percent year-on-year in September, following a 17.8 percent decline in August. The gauge, published by the National Bureau of Statistics, tracks companies with a turnover of more than Rmb20mn ($2.8mn).

The figures come amid increased pressure on Beijing to support the economy after a string of disappointing data highlighting the impact of a multi-year property slump and weak consumer demand.

In late September policymakers unveiled a barrage of measures designed to boost confidence and support stock and housing markets, although analysts called for more fiscal stimulus to restore momentum.

The Standing Committee of China's National People's Congress will meet from November 4-8, an event that will be closely watched for updates on the government's spending plans.

Beijing has set a GDP growth target of 5 percent this year, the joint-lowest target in decades. According to figures released this month, GDP expanded by 4.6 percent in the third quarter of the year.

Consumer prices remained close to inflationary territory in China, rising just 0.4 percent last month, while producer prices fell 2.8 percent. The producer price index, which tracks factory gate prices and is driven heavily by commodity prices, has been in negative territory for the past two years.

In an accompanying statement, the NBS said the fall in ex-factory prices had put “significant pressure” on corporate profits and revenues and cited “insufficient” demand.

Analysts at Goldman Sachs noted that profits in downstream industries closer to consumers were largely flat compared to pre-Covid levels.

Xi Jinping's government has emphasized the need to upgrade its manufacturing and production this year in everything from clean energy to AI. The NBS said profits in the high-tech industry have expanded 6.3 percent so far this year compared to the same period last year.