(Yicai) March 28 -- Profits at China's industrial companies jumped 10.2 percent in the first two months from a year ago amid a sustained recovery in demand and a jump in production, as the country’s economic support policies and adjustments show effect.

Profits at industrial firms with an annual turnover of at least CNY20 million (USD2.8 million) totaled CNY914.1 billion (USD126.5 billion) in January and February, data released yesterday by the National Bureau of Statistics showed. That compared with a 2.3 percent fall in the same period of 2023.

The low-base effect will go on supporting year-on-year profit gains as growth-stabilizing policies continue to bear fruit, helping consolidate and enhance the economic recovery, said Gao Ruidong, chief economist at Everbright Securities.

The pressure of shrinking external demand on China's exports will also improve slightly, as global trade is expected to pick up a bit this year, Gao added. 

Fiscal policies have been front-loaded this year, with the central bank cutting the reverse requirement ratio more than expected, Wen Bin, chief economist at China Minsheng Bank, pointed out, noting that these efforts provide sound conditions for industrial production. A gradual uptick in profits is likely, he said.

Domestic demand is gradually picking up while external demand is showing signs of a soft landing, which will help to boost business confidence, Wen said. The growth rate of industrial value added is also expected to continue rebounding, he said.

From a price perspective, raw material cost pressures are easing and enterprise unit costs are expected to remain at historically low levels, Wen said. That coupled with low costs, will help lift profits at industrial companies, he added.

Significant efforts will be made next to build a modern industrial system, expand internal demand, and continuously consolidate and enhance the rising economic momentum, said NBS statistician Wei Ning.

Profits at private industrial companies rose 12.7 percent in the first two months of the year from a year earlier, compared with a 2 percent year on year jump in 2023, NBS figures also showed.

The overall environment for developing the private economy in China is continuously improving, said Dong Yu, executive vice director at the China Institute for Development Planning at Tsinghua University. The dynamism of private businesses is steadily recovering, and the private economy is rebounding and improving along with the entire economy, he added.

The private economy will be under fewer constraints this year, receive more stimulus and support, so it can develop quicker, Dong said.

Editors: Xu Wei, Martin Kadiev