Robotic arms install vehicle and motorcycle wheel parts at an automotive parts assembly factory in a local industrial park in Huaibei city, East China's Anhui Province, on April 22, 2023. China's auto manufacturing and sales are gaining pace this year. Photo: VCG

 
China's major industrial firms saw growth of revenues and profits gain momentum in March thanks to the ongoing recovery of the domestic macro-economy driven by rising market demand.

Revenues of industrial firms with annual main business revenues of at least 20 million yuan ($2.9 million) bucked a negative growth trend since November last year by registering a 0.6 percent growth in March, latest data from the National Bureau of Statistics (NBS) showed on Thursday. 

The figure stood at negative 1.3 percent in the first two months on a yearly basis.

The increase of revenues helped to shore up combined profits, which fell 19.2 percent year-on-year in March. It narrowed 3.7 percentage points from the January-February period, according to the NBS data.

During the first quarter, the combined profits of industrial firms above designated scale reached 1.52 trillion yuan, down 21.4 percent from the previous year.

Zhou Maohua, an economist from Everbright Bank, told the Global Times on Thursday that "the profitability improvement of major industrial firms in March has further testified the ongoing recovery of domestic consumption and demand."

The positive signal bodes well for a bright prospect for a sustained domestic economy which is aiming to attain an around 5 percent growth rate this year, Zhou said.

Overall, decline profits across major industrial firms are still being seen across the market, but with the upstream prices falling on a yearly basis, it is conducive to help improve the profitability of downstream firms, said NBS statistician Sun Xiao.

"In the next stage, we should continue to focus on expanding market demand, boosting market confidence, improving business expectations and the level of production and sales, and accelerating the recovery of industrial enterprises' profits," Sun said.

Zhou forecasted that the year-on-year growth rate of major industrial firms' profits will remain in contraction territory due to the high base last year and the low prices of energy commodities. "But with the demand showing strong recovery momentum and supportive policies for industrial enterprises in place, it is expected that the operating conditions of the industrial sector will improve steadily," Zhou noted. 

A recent survey by the NBS revealed that major industrial firms' expectation index for the comprehensive business conditions in the second quarter came in at 64.6, an increase of 4.4 percentage points from the fourth quarter of 2022, while their expectations for employment and investment both increased by 3.7 percentage points.

Among the 41 industrial categories, 22 saw their profit growth accelerating or reversing negative growth in March, according to the NBS. Equipment manufacturing sector gained a marked boost in profits last month, contributing to driving the overall improvement of industrial firms. 

Auto manufacturing, one of most eye-catching segments as policymakers keep in place supportive measures to bolster consumption, saw profits up 9.1 percent year-on-year in March compared with a negative growth of 41.7 percent in the first two months.

China's auto sales in March hit 2.45 million units, up 9.7 percent from a year ago, data from the China Association of Automobile Manufacturers showed.

With the policy effects to expand domestic demand and consumption being unleashed, combined with strong consumer spending, the profitability of some consumer goods manufacturing industries also improved in March. 

Among the 13 consumer goods manufacturing industries, profitability of seven industries improved compared with the first two months of the year

On top of that, the profits of foreign-funded firms are also recovering thanks to effective policies and measures to stabilize foreign investment and trade, according to Sun.

China's foreign direct investment in the first quarter of 2023 reached 408.45 billion yuan, up 4.9 percent year-on-year, data from China's Ministry of Commerce showed, demonstrating the nation's high-level opening-up and attractiveness to foreign investment.

Global Times