(Yicai Global) Oct. 28 -- China’s Industrial Profits rose 16.3% year on year in September despite an energy crisis and a tidal wave of negativity from the English-speaking media over various challenges facing the country’s economy, which have sought to depict rising electricity prices as detrimental to production and exports. The newly published data, however, tells a different story, showing an increase of 6% from the August’s total. Although the surge in commodity costs did hurt the profits of energy firms by 24.6% as anticipated, the subsequent booming in mining demand and strong exports, combined with government efforts to control the crisis, seen gains continue for producers contrary to expectations.

Why did Industrial profits beat expectations? And why were forecasts surrounding China’s industry wrong? First of all, there is a diminishing confidence in the mainstream media in the west to report on matters pertaining to China’s economy in good faith. As geopolitical competition with the US has intensified, western news outlets have increasingly found incentives in reporting deliberately negative slanted, biased and narrative induced content which conforms to political and ideological preferences as opposed to impartial fact-reporting.

In doing so, such outlets have understated the power of the Chinese state to bring the commodity crisis under control and quash the energy crisis. Over the past two weeks, China’s government has maximized the domestic mining of coal and whilst increasing imports. It has also clinched deals to buy increased supplies of liquid natural gas from Russia, Qatar and the United States. Whilst doing this it has cracked down on market speculators and imposed artificial controls on futures which all have seen prices subsequently plummet for a full straight week. A few days ago, Zhengzhou thermal coal futures reached a price of CNY 3878.5 per ton, but have now retreated as of Wednesday to around CNY 2600, showing how dramatic state intervention has nipped the crisis. As the China Coal Industry Association quoted “the coal supply of key power plants has been greater than the consumption for 20 consecutive days as coal production grows.

Second of all, China’s export demand has kept up the pace and continued to grow month and month irrespectively of international headwinds such as inflation, only two weeks ago exports remained on a 28% year on year growth. Claims that the energy crisis had thwarted production through power cuts were ultimately overblown and its overall impact on the Chinese economy was ultimately exaggerated. It has been a frequent theme of the western media to portray China’s supply chain as less stable or unreliable than it actually is as a means of incentivizing decoupling. As recent headlines by the New York Times quote: “China’s Power Problems Expose a Strategic Weakness” saying such will “damage its image as a reliable manufacturing base”, as well as querying “Is China in big trouble?”- These headlines are out of touch with reality.

Given this, with the energy crisis already being brought under control sooner than commentators anticipated, one should expect China’s industry to continue to steam ahead for the rest of 2021, exceeding expectations. Strong state intervention, coupled with highly resilient supply chains and booming international demand has seen China hold a critical advantage in weathering a storm of inflation and commodity costs which have upended countries all around the world and added headwinds to global growth. The tidal wave of politically motivated pessimism espoused by the press is simply unwarranted, and should be gauged as an accurate reflection of China’s realities.