A technician makes adjustments on an in-house developed machine at a company in Keqiao District of Shaoxing, east China's Zhejiang Province, March 14, 2024. Keqiao District of Shaoxing is a cluster base for the textile industry, housing more than 8,000 textile businesses with an output value of over 100 billion yuan (about $13.9 billion). In recent years, the district has promoted transformation and upgrading, introducing environmentally friendly machinery and innovative technologies. Photo: Xinhua

China's industrial profits rose 10.2 percent in the first two months of 2024, reversing a decline of 2.3percent in 2023, government data showed on Wednesday.

Observers said that the steady performance showed that China's industrial sector had bottomed out and entered an expansionary phase, laying a concrete foundation for GDP growth this year.

Profits of industrial enterprises above the designated size totaled 914.06 billion yuan ($126.5 billion), up 10.2 percent year-on-year, marking the 7th month of consecutive gain,the National Bureau of Statistics (NBS) said.

The rebound was fueled by companies' improved operations and sales amid a recovery of domestic demand and policy support. It also reflected the relatively low year-earlier base, Zhou Maohua, a macroeconomist at China Everbright Bank, told the Global Times on Wednesday.

Li Changan, a professor at the Academy of China Open Economy Studies of the University of International Business and Economics, told the Global Times on Wednesday that the industry's recovery was accelerating and the solid performance haslaid a concrete foundation for the rest of the year.

Notably, manufacturers' profits hit 613.45 billion yuan, becoming adriving force behind the overall growth with a rise of 17.4 percent year-on-year, according the data of the NBS.

With the improvement of the modernized industrial system, the profit growth of the equipment manufacturing sector accelerated, Yu Weining, an NBS statistician, noted. In the first two months, profits of the sector rose by 28.9 percent year-on-year, 24.8 percentage points higher than last year.

"The equipment manufacturing sector is the core of the industry's development, and the sector's fast growth shows that downstream demand is also growing," Li said.

"More efforts have been paid to shore up the real economy, and the creation of new quality productive forces is high on the agenda of the government," said Li, adding that the industrial economy will also benefit.

The Government Work Report of 2024 stated that China will strive to modernize the industrial system and develop new quality productive forces at a faster pace.

The NBS called for further efforts from the industrial sector to speed up manufacturing modernization, foster new quality productive forces, expand domestic demand and shore up market vitality, in order to sustain the country's economic growth.

Profits of electronic devices manufacturers rose 2.11 times. Producers of rail, ship and aerospace transport equipment achieved rapid growth of 90.1 percent, while vehicle manufacturing jumped by 50.1 percent.

Consumer goods manufacturing was lifted by improved domestic and overseas demand and holiday-related sales. Profits increased 12.9 percent year-on-year, bouncing back from a decline of 1.1percent in 2023.

Businesses of various ownership types and sizes showed increasing vitality. In the first two months of 2024, profits of state-owned enterprises rose 0.5 percent year-on-year while those of private enterprises were up 12.7 percent.

Medium-sized enterprises achieved profit growth of 6 percent, while smallenterprises' profits rose by 18.9 percent, the NBS said.

Speaking of potential headwinds and challenges, Zhou pointed out that the weak recovery of global demand, price volatility of raw materials and energy, and geopolitical conflicts may disrupt international industrial chains, and he urged Chinese players to prepare for that outcome.

During the just-concluded China Development Forum 2024, Zheng Shanjie, head of the National Development and Reform Commission, China's top economic planner, said that China will remove all restrictions on foreign investment access in the manufacturing sector.

In addition, Zheng said it is necessary to start a group of key technology programs, accelerate the transformation of traditional industries, and develop emerging industries, to ramp up China's technology-driven industrial innovation.