China’s industrial profits soar despite woes

China’s industrial profits grew at a faster clip in June, official data showed on Saturday, even as businesses were grappling with a downshift in consumers’ sentiment amid a shaky economic recovery.

A 3.6% year-on-year rise in profits last month followed a 0.7% gain in May, while first-half earnings were up 3.5%, accelerating from a 3.4% increase in the January-May period, National Bureau of Statistics (NBS) data showed.

“Relatively rapid industrial production growth, coupled with a significant easing in factory-gate price declines since the second quarter, have promoted a stable recovery of corporate revenue,” NBS statistician Wei Ning said in a separate statement.

“Meanwhile, we should also see that insufficient domestic effective demand has constrained the continuous improvement of corporate performance, and the severe and complex international environment has increased the operating pressure of enterprises.”

The robust data contrasted with a slowing economy, which missed forecasts in the second quarter as the consumer sector was downbeat amid job market woes and a protracted housing downturn.

Yet in spite of rising trade tensions with the West, optical transceiver firms Zhongji Innolight and Suzhou TFC Optical Communication forecast multifold rises in first-half earnings, as the two suppliers for US chip giant Nvidia turn out to be big winners from a global artificial intelligence build out.

China is trying to provide heavier monetary stimulus to prop up its fragile economy, surprising markets for a second time on Thursday by conducting an unscheduled lending operation at steeply lower rates. Only days earlier, the authorities cut several benchmark lending rates in the wake of a top leadership meeting.

The state planner announced plans on Thursday to arrange about 300 billion yuan of funds from ultra-long treasury bonds to step up a nationwide equipment upgrade and consumer goods trade-in campaign.