Policy space must be utilized to provide targeted support to firms

The operating revenue of China's industrial enterprises above designated size continued its growth trajectory to increase by 1.9 percent year-on-year in the first 10 months of this year, data released by the National Bureau of Statistics show.

In October, the operating income of such enterprises fell by 0.2 percent year-on-year, but the decline was 0.7 percentage points less than in September, driven by the steady growth of industrial production and the recovery of sales.

Among the 41 industrial categories, the profit growth rate of 27 industries accelerated in October compared with September, and a number of manufacturing sectors registered improvements in profits, with high-tech manufacturing registering double-digit profit growth year-on-year. In terms of industry, seven of the eight industries in equipment manufacturing saw positive profit growth or a narrower profit decline in October compared with September, and three of the five industries in raw material manufacturing and nine of the 13 industries in consumer goods manufacturing saw year-on-year profit growth pick up compared with September.

With the accelerating high-end, intelligent and green development of manufacturing, the profit of related industries has seen rapid growth, with wearable intelligent device manufacturing, sensitive components and sensor manufacturing, industrial control computer and system manufacturing, and lithium-ion battery manufacturing reporting 73.3 percent, 48.8 percent, 40.0 percent and 39.4 percent profit growth year-on-year, respectively.

The growth and improvement of business revenues and profits of industrial enterprises are closely related to the country's reinforced pro-growth macro policies since the end of September.

In order to strengthen countercyclical adjustment of macro policies, expand domestic effective demand, increase support to enterprises, promote the reeling real estate market to stabilize, and boost the capital market, the top authorities have accelerated the rollout of a package of incremental policies, which, along with previous policy measures, have worked to promote sustained recovery of the economy.

Improving signs in multiple economic areas not only show the package of introduced incremental measures is showing results, but also highlight the strong resilience and potential of China's economy.

However, it should be noted that domestic consumer demand is still weak, and the external environment remains complex and volatile, which may constrain the room for future profit recovery of China's industrial enterprises.

Considering China still has space for policy maneuvering, the authorities should next focus on the implementation of adopted policies to the letter to consolidate the good trend of economic recovery, and continuously provide targeted supports to enterprises to further enhance their confidence.