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China industrial profit growth accelerates in Sept despite cost pressures -Breaking

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© Reuters. FILEPHOTO: Steel products are loaded onto a ship by workers wearing masks in response to the COVID-19 outbreak. This was taken at Lianyungang (Jiangsu Province, China) May 27, 2020. China Daily via REUTERS

BEIJING, (Reuters) – Profits at China’s industrial companies rose faster in September despite the fact that rising raw material prices and supply shortages squeezed margins. This weighed down on factory activity.

The statistics bureau reported Wednesday that profits rose 16.3% year-over-year to 738.74 Billion Yuan ($115.72 Billon), a sharp increase from August’s 10.1% gain.

The rising price of coal and supply shortages have caused severe damage to the industrial sector.

Beijing, however, has taken several measures to lower metals prices and alleviate the country’s power shortage. These include urging coal miners for increased output and managing electricity demand in industrial plants.

The government stated in October that coal-fired power prices will be allowed to fluctuate at up to 20% below base, which allows power plants more flexibility to transmit the higher costs of production to end-users.

According to the statistics bureau, profits at industrial companies increased 44.7%% annually between January and September, reaching 6.34 trillionyuan. This is a slower rate than the 49.5% rise in 2021’s first eight-months.

China’s third quarter economic growth was slowest in this year due to power cuts and wobbles within the property sector.

Inflation records in the factory sector are putting pressure on downstream and middle businesses, making it difficult for them to pass costs onto consumers.

Reuters analysts polled expect that the People’s Bank of China will not attempt to stimulate China’s economy by reducing the cash reserve banks are required to hold until the end of the first quarter of 2022.

Industrial firms’ liabilities rose 8.2% compared to a year ago at the end of September, which was a decrease from 8.4% at the end of August.

Industrial profit data includes large companies with an annual revenue of more than 20 million yuan.

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