Profits of China's major industrial firms dropped 2.9 percent year-on-year in the first 10 months, while high-end sectors and some key industries saw signs of a rebound, the National Bureau of Statistics said on Wednesday.
Officials and analysts said that although the decline widened from a 2.1 percent fall in the first nine months, the increase in high-end sectors showed the country is marching toward higher-quality development.
Industrial profits shrank 9.9 percent year-on-year in October to 427.56 billion yuan ($60.83 billion), the NBS said.
Zhu Hong, an NBS senior statistician, said the industrial profit decline was mainly caused by a slowdown in industrial production and sales and other unfavorable factors.
Among the 41 industries surveyed, 30 sectors witnessed year-on-year increases in total profits in the first 10 months, while 11 sectors saw profit declines.
Zhu said some key sectors have shown signs of obvious profit recovery, including high-tech manufacturing, strategic emerging sectors and equipment manufacturing.
January-October high-tech manufacturing posted 7.5 percent year-on-year profit growth, 1.2 percentage point higher than that in the first nine months, according to the NBS.
Strategic emerging industries and the equipment manufacturing sector saw profits jump 5.3 percent and 2 percent, respectively, in the January-October period, 0.7 percentage point and 1.1 percentage point higher than that in the first nine months. Though vehicle manufacturing posted a 14.7 percent decrease in profits, the decline narrowed by 1.9 percentage point, Zhu said.
Profits of private and small enterprises surged 5.3 percent and 8.8 percent, respectively, Zhu added.
Tang Jianwei, chief researcher at the Bank of Communications' Financial Research Center, attributed this profit growth to a series of supportive government policies since last year.
"More efforts are needed to lighten the burden for enterprises, simplify administration, delegate power, ensure implementation of the tax and fee reduction policy more thoroughly and foster a better business climate," Tang said.
He added that while industrial profits shrank significantly in the first 10 months, some structural opportunities still exist.
"While many sectors posted profit declines, some have seen an increase in industrial concentration and profit growth in leading firms. One reason is that some less competitive and small producers in low-end sectors have been phased out in the process of structural reforms and reducing overcapacity," he said.
The Chinese economy is now transitioning from a phase of rapid growth to a new stage of high-quality development, paying more attention to quality over quantity.
Stanimira Koleva, senior vice-president and general manager of Asia Pacific business at global mapping and location data service provider HERE Technologies, said China's economic growth may not be as fast as before, but it will be stable and consistent.
"The country will see continuous economic growth, with key fundamentals being constantly growing domestic demand, the improvement of IP protection and the way China originates business models," Koleva said.