(Yicai) Oct. 28 -- Profits at China's industrial enterprises plunged last month by the most this year, mainly because of persistently low factory gate prices, surging costs, and a high comparative base a year earlier.

Profits earned by industrial firms with an annual turnover of at least CNY20 million (USD2.8 million) sank 27.1 percent to CNY575.4 billion (USD85.9 billion) in September, according to data released by the National Bureau of Statistics yesterday. That followed a 17.8 percent drop in August.

Lower-than-expected demand growth, particularly in export markets, has been weighing on factory prices this year, while rising production costs have eroded profit margins. But the government is taking steps to stabilize and revive industrial profits, particularly by promoting high-tech manufacturing, consumer goods, and infrastructure investment.

China should expedite the implementation of existing policies and the recent stimulus package to foster a suitable environment for the healthy development of industrial enterprises and support profit recovery, said Yu Weining, an NBS statistician.

In the nine months ended Sept. 30, industrial profits fell 3.5 percent to CNY5.23 trillion (USD735.4 billion), while business revenue rose 2.1 percent, NBS data also showed.

Profits at high-tech and consumer goods manufacturers climbed 6.3 percent and 2.4 percent, respectively, underlining the resilience of industrial economic development, Yu noted, while the textile and furniture sectors reported gains of more than 10 percent.

China will introduce initiatives to boost consumption and expand domestic demand this quarter, including some focused on technology upgrades, equipment renewal, the low-altitude economy, and smart manufacturing, Wang Jiangping, vice minister for industry and information technology, said recently.

The country will also speed up the issuance of special government bonds and CNY150 billion in relending for tech upgrades, as well as kick off preparations for pilot programs in manufacturing transformation, Wang noted. There are 36,000 industrial projects under construction or about to commence in China, with projected investment in excess of CNY11 trillion (USD1.4 trillion) over the next three years.

CNY300 billion of ultra-long special government bonds have been issued to expand the scope of trade-in policies and stimulate investment and consumption, said Wen Bin, chief economist at Minsheng Bank.

The funds have been fully allocated, and special bond investments have accelerated, which will positively impact industrial confidence and strengthen the recovery of the industrial economy, ultimately promoting profit restoration, Wen added.

Editor: Futura Costaglione