The latest data reveals a 7.9 percent year-on-year surge in profits of industrial enterprises above designated size in the manufacturing sector, reaching 1.017 trillion yuan ($143 billion) in the first quarter of 2024. This impressive growth highlights the robust performance of the Chinese mainland's industrial economy.
This remarkable profit increase stems from a harmonious blend of demand and supply-side factors. On the demand front, economic indicators showcase a broad resurgence in investment and consumption. Fixed asset investment, excluding the real estate sector, surged by 9.3 percent year on year in Q1 2024, signaling a renewed appetite for industrial upgrading. High-tech industries such as aerospace, equipment manufacturing, and computer manufacturing experienced double-digit growth. Consumer spending also remained strong, with total retail sales up by 4.7 percent year on year, bolstered by a 47.3 percent increase in tourist expenditure during the Spring Festival holiday. This surge in consumer demand has driven industrial activity catering to household consumption.
A series of targeted policy measures have effectively incentivized both consumer spending and productive capital formation. With over 5 trillion yuan in annual demand for equipment investment renewal in key sectors, large-scale initiatives have facilitated equipment upgrades and the replacement of outdated consumer goods. This has stimulated investment in industrial machinery while boosting sales of new household products. The increase in consumer expenditure has replenished revenue streams and order books for industrial firms serving the consumer market. Additionally, the government's comprehensive push for the \"Three Major Projects\"—affordable housing, urban village renewal, and public infrastructure—has injected substantial construction stimulus, unleashing significant demand across industrial supply chains. This construction-led investment boom has provided industrial players with a consistent source of orders and sales revenues, further enhancing profitability.
On the supply side, enterprises have made concerted efforts to bolster new quality productive forces through technological upgrades and operational modernization. Xiaomi Automobile Super Factory, which began production in Beijing in March this year, exemplifies this trend. The factory's body shop boasts a comprehensive automation rate of 91 percent, featuring over 400 robots and more than 400 high-precision cameras, enabling efficient black-light production. This focus on technological modernization aligns with the increasing emphasis on advancing new quality productive forces within policy frameworks. The Central Economic Work Conference held at the end of 2023 underscored the importance of enhancing enterprises' new quality productive forces through initiatives such as fostering breakthroughs in core technologies and integrating cutting-edge innovations across production processes.
Reference(s):
Profitable start for Chinese manufacturing fueled by policy tailwinds
cgtn.com
