Companies listed in the Chinese mainland equity market achieved stellar growth in the first nine months of this year, thanks to government measures such as value-added tax (VAT) reform and stimulative monetary policy, experts noted.
But their financial performance does not mean they are developing soundly, as listed companies' profits are partly driven up by government subsidies, and the domestic real economy is still losing steam, experts warned.
In the first three quarters, the revenues for 2,955 A-share listed companies totaled 22.43 trillion yuan ($3.31 trillion), up 3.74 percent year-on-year, the Securities Daily reported on Tuesday, citing statistics from domestic financial data provider Eastmoney Choice.
Among companies listed on the mainland stock exchanges, 1,929 posted year-on-year net profit growth, accounting for 65 percent of the total, the Securities Daily reported, citing relevant company financial reports.
One of the reasons behind the robust growth is that the government rolled out various policies to reduce burdens on companies and cut their costs, Li Jin, deputy head of the China Enterprise Reform and Development Society, told the Global Times on Tuesday.
For example, tax reform, which was introduced on May 1, replaced all business tax with VAT. That move is estimated to ease corporate payments by at least 60 million yuan this year, according to Li.
The Chinese government has also carried out positive monetary policies to scale up investments in bridges, railways and nuclear power stations, which in turn pushed up domestic demand and contributed to Chinese companies' growing revenues, Feng Liguo, an expert at the Beijing-based China Enterprises Confederation, told the Global Times on Tuesday.
However, the profit picture is partly a result of government subsidies, Feng said.
In the first three quarters of this year, 93 percent of mainland-listed companies received government funds, and the amount jumped about 12 percent year-on-year to 71.49 billion yuan, the Securities Daily said.
Also, the bulk of funds flowed into State-owned enterprises (SOEs), Feng said, noting that this shows that SOE reform, or the implementation of market-based mechanism at State-owned companies, has a long way to go.
Also, signs of recovery in the manufacturing sector have yet to surface. Out of the 356 companies that posted net losses in the first nine months of this year, 225 of them are producers such as Chongqing Iron and Steel Group and China First Heavy Industries Group.
"The manufacturing industry still suffered from overcapacity, which led to plunging commodity prices and mounting corporate debts," Li said.
Amid sluggish demand, it is also common for listed companies to start a "price war," experts said.
