China’s industrial sector is gaining momentum as earnings rebounded in April

A worker works on the assembly line of Voyah, a Chinese luxury electric car brand, in Wuhan, central China’s Hubei province, April 1, 2024. (Photo/Xinhua)

China’s industrial sector saw stronger growth last month, with a sharp rise in profits pointing to a sustained recovery.

The National Bureau of Statistics (NBS) said on Monday that profits of China’s largest industrial enterprises rose 4 percent year-on-year in April 2024, reversing a 3.5 percent decline recorded in the previous month. Revenue growth for these types of businesses has also seen improvement, with a 3.3% increase last month compared with a 1.2% decline in March.

Analysts say the encouraging data is the result of a combination of supportive government policies and rising domestic demand and reflects a stable, broader economy.

As market demand continued to improve and industrial production gained momentum, these enterprises posted better performance last month, NBS statistician Yu Weining said.

The data showed that large industrial enterprises with annual core business revenues of at least 20 million yuan (about 2.81 million U.S. dollars) generated a total profit of 2.09 trillion yuan in the first four months of this year, accounting for 4 .3 percent year-on-year annual growth, which is at the level of growth recorded in the first three months of 2024.

Yu said 75.6 percent of 41 major industry sectors saw profits increase in January-April this year, up from 68.3 percent in the first three months.

Manufacturers recorded an 8% increase in profits. compared to the previous year, and enterprises from the energy industry recorded 44.1%. increased profits due to lower coal costs and increased energy production. However, during this period the mining and gas industry suffered losses.

In particular, the statistician noted that the equipment manufacturing industry, with a 16.3 percent increase in profits in the first four months, continued to drive growth of the overall industrial sector.

“The industry has witnessed significant progress towards high-end, smart and environmentally friendly production and supporting new-quality production forces,” Yu said.

At the time of the crash, the electronics industry saw a significant increase in profits, posting a remarkable increase of 75.8%, driven by strong demand for smartphones, chips and liquid crystal displays. The transportation equipment industry saw profits increase 40.7%, thanks in part to rapidly growing shipbuilding orders. Meanwhile, the automotive industry saw a 29 percent increase in profits.

Moreover, Yu added that as consumer sentiment warmed, consumer goods production also showed a clear upward trend, with profits increasing by 12 percent.

Across 13 major consumer goods sectors, from furniture to food, all posted earnings growth. The man-made fibers industry was a standout in this sector, posting a massive 181 percent increase in profits.

China has implemented a series of measures this year to consolidate its economic recovery, stepping up efforts to strengthen its industrial sector and unleash the potential of domestic demand.

In March, the central government announced a plan to promote large-scale equipment upgrading and trade in consumer goods, part of its efforts to boost domestic demand and support continuous economic growth, which is likely to create a market worth more than 5 trillion yuan annually over the next few years.

Despite a steady industrial recovery, China still faces insufficient domestic demand and a complicated external environment, Yu said, noting that more needs to be done to consolidate the positive trend.

Greater efforts should be made to accelerate the development of new-quality productive forces, promote industrial upgrading and help enterprises overcome difficulties, thereby accelerating the high-quality development of the industrial sector, Yu explained.