Profits at China's industrial firms grew at the fastest pace in eight months in November, but broad weakness in domestic demand remains a risk for company earnings next year.
China's industrial sector has faced persistent pressure in the past year, with manufacturers battling sluggish demand and a profit-denting trade dispute with the US. But recent factory activity surveys have pointed to a nascent recovery in the manufacturing sector, following Beijing's accelerated stimulus measures to steady growth.
Industrial profits in November rose 5.4 per cent from a year earlier to 593.9 billion Chinese yuan (Dh312bn), snapping three months of decline, as production and sales quickened, data from the National Bureau of Statistics showed on Friday. That compared with a 9.9 per cent drop in October.
The expansion was mostly due to quickening production and sales, said Zhu Hong, an official with the statistics bureau, in a statement released with the data.
But he cautioned that the rebound may not be an indication of a sustained recovery.
"Although the profit growth turned to positive in November, we have to see that the current downward pressure on the economy is still big and the volatility and uncertainty of profit growth still exist due to multiple factors such as market demand and industrial prices."
In November, profits at state-owned industrial firms rose 0.6 per cent from a year earlier, reversing a declining trend since the second half of this year, while private sector profits also posted a significant acceleration in growth.
Among sectors, the chemical, petroleum processing and steel industries reported recovering profits last month due to rebounding market demand and rising prices.
Industrial growth has stimulated Asian stocks.
The CSI300 index - stock market index designed to replicate the performance of top 300 stocks traded in the Shanghai and Shenzhen stock exchanges - rose 0.9 per cent, while the Shanghai Composite Index gained 0.9 per cent. Both indexes were on track for their fourth straight weekly gain.
In Hong Kong, the benchmark Hang Seng index hit a five-month high. The Hang Seng index climbed 1.2 per cent, while the Hong Kong China Enterprises Index gained 1.3 per cent.
China has called on its biggest state firms to take a more active role in Hong Kong, including stepping up investment and asserting more control of companies in the financial hub.
Investors were also encouraged by signs that Beijing may unveil more measures to boost the world's second-largest economy.
On Thursday, state media reported China plans trillions of yuan in major infrastructure investments in 2020.