Industrial profits in China's major firms saw a drop of 2.9 percent for the first 10 months of 2019 but growth in high-end sectors pointed to a recovery that could pull up the numbers by the coming years.
According to China Daily, the National Bureau of Statistics (NBS) said that aside from several high-end sectors, there were also major industries that displayed signs of recovery in the coming months.
It is also worth noting that in the NBS' data, a total of 41 industries were surveyed for growth and decline rates. Only 11 sectors posted profit slumps, while the rest showed year-on-year hikes in profits.
NBS senior statistician, Zhu Hong, revealed that during the January to October period, high-tech manufacturing sectors posted a profit increases of 7.5 percent, with a 1.2 percent gain from the first nine months of the year.
For small enterprises, profits soared by 8.8 percent during the said period, while private enterprises also recorded a 5.3 percent increase in profit growth.
Chief researcher at the Bank of Communications' Financial Research Center, Tang Jianwei, explained that the growth of profits in several key high-end industrial sectors were boosted by government initiatives to ease policies.
Tang also noted that another reason for increased profit growth in some Chinese industrial sectors is the phasing out of low-end segments that had to be cut off from the list of industrial sectors due to necessary structural reforms.
Industry analysts said profit increases in key sectors will help the Chinese economy in its transition to a stage of high-quality development focuses on top-standard goods instead of speeding up on production.
Global markets were rocked on Wednesday after China posted its lowest industrial profit figures since 2011. Profits dropped by 9.9 percent in October, reaching 427.56 billion yuan.
According to the South China Morning Post, it was also the third consecutive month that declines were recorded among industrial firms, raising concerns about the Chinese economy and whether it can recover soon.
Analysts from Nomura predicted this week that Beijing will move to ease interest rates and roll out other measures to help boost the the economy even if the country already has limited policy-easing space.
On the other hand, some economists believe that while external demand has been falling over the past months due to the China-U.S. trade war and other headwinds, domestic consumption, and investments from other partner countries could help boost the Chinese economy early next year.
Market experts are also keeping watch of developments between China and the United States as the two sides attempt to sign "phase one" of their trade agreement before the year ends.
