Workers install solar panels on the roof of an industrial building in Xiajiang county, East China's Jiangxi Province on October 25, 2021. The distributed solar power plant can generate electricity for industrial use or sell surplus power to the grid. Photo: VCG

The growth rate of industrial profits for Chinese enterprises above a designated size accelerated in September, as profits of industrial enterprises maintained a strong growth trend over the third quarter with over 70 percent of the industries exceeding their pre-epidemic profit levels, the National Bureau of Statistics (NBS) revealed on Wednesday.

In September, the profits of industrial enterprises grew by 16.3 percent on a yearly basis, accelerating from a 10.1 percent increase seen in August. In the first three quarters, the profit of industrial enterprises has grown by 44.7 percent from the previous year, or up 18.8 percent on a two-year basis, though the growth rate slowed in the third quarter, the NBS said.

Overall, 70 percent of the industries surveyed have recorded stronger profits in the third quarter compared with the pre-pandemic level, with mining and high-tech manufacturing industries playing a leading role to drive up the growth, according to the NBS.

The profit growth in the mining industry and raw material manufacturing industry jumped by 200 percent and 42.5 percent, respectively, from the previous year, providing important support for the improvement of the profits of industrial enterprises, Zhu Hong, a senior statistician at the NBS, said on Wednesday.

Profits for the coal and oil exploration firms were 2.72 times and 2.97 times higher than the previous year while those of gas exploitation, nonferrous metals, and petroleum processing were up by over 70 percent from last year.

High-tech manufacturing also saw profitability grow by 33.6 percent year-on-year, 19.3 percentage points higher than the industry average, led by growth in pharmaceutical manufacturing industry, electronic and communication equipment manufacturing industry and aerospace and equipment manufacturing industry.

However, Zhu noted that challenges remain ahead as soaring prices for bulk commodities and backlogged supply chains are expected to heap pressure on the ongoing recovery of corporate profits.

Authorities are seeking to stabilize commodity prices, expand domestic demand, promote industrial transformation and upgrading to ensure that the industrial economy operate within a reasonable range, Zhu noted.

It is expected that profits of industrial firms, while maintaining strong growth momentum over the fourth quarter, will likely experience a moderate slowdown in certain sectors, analysts said. 

The increased cost pressure on middle and lower tier enterprises, coupled with the strong supply constraints on upstream high energy consuming industries, will affect corporates. This, combined with the pressure on real estate investment, will potentially contribute to slimmer overall margins during the last three months of the year, Wu Chaoming, chief economist at Chasing Securities, told the Global Times on Wednesday.

"Cold weather coupled with a prolonged economic recovery timeline will lead to increase in costs in the energy and bulk commodity markets, leading to the producer price index (PPI) growth rate remaining above 10 percent in the fourth quarter," Wu said.