China September industrial profit growth slows, signals fragile recovery
Profits in September rose 7.7 percent to 577.1 billion yuan, slowing sharply from August's 19.5 percent jump, according to data released by the National Bureau of Statistics (NBS) on its website on Thursday.
Profits in industries such as electronics, steel and electricity were hit by a significant drop in growth, He Ping, a NBS official said in a note accompanying the data.
The August profit growth marked the fastest pace in three years, helped by Beijing's spurge on infrastructure projects and a booming real estate industry.
Low base effects from the stock market crash in 2015 faded in September, the NBS said.
Recent indicators showed China's economy was stabilizing, as it grew 6.7 percent in the third quarter from a year earlier, same from the previous quarter, as increased government spending and a property boom offset stubbornly weak exports.
But industrial overcapacity, mainly in the traditional sectors, have been a drag on profits in recent months and analysts say the outlook for earnings in the sector could hinge on the progress made by policy makers to cut capacity.
Beijing has embarked on a campaign to cut capacity in the coal and steel sectors in the economy's most significant transformation in two decades.
Chinese industrial firms' liabilities at the end of September were 4.7 percent higher than at the same point last year.
The data covers large enterprises with annual revenues of more than 20 million yuan from their main operations.
(Reporting by Beijing Monitoring Desk; Editing by Shri Navaratnam)