Coal piles at Rizhao port in China’s Shandong province on November 2, 2021.
VCG | Visual China Group | Getty Images
China’s industrial profits extended their decline to a fourth straight month, falling 7.3% in November from a year earlier, signaling that Beijing’s stimulus measures have yet to significantly stem the slide in corporate profits.
However, the decline in profits was smaller than the decline in previous months. They had fallen 10% year-on-year in October after a 27.1% drop in September – their biggest drop since March 2020 according to Wind data.
There are “no surprises” when it comes to the persistently lower profits faced by industrial companies, especially in China’s disinflationary environment, said Suan Teck Kin, head of research at UOB.
However, “the worst is over” for China’s economy given the stimulus push, she added. “I think it’s basically just bottomed out, and now it’s on the way up,” he told CNBC’s Street Signs Asia.
Industrial profits are a key indicator of the financial well-being of factories, utilities and mines in China. The earnings show how the business balance stacks up as a result of Beijing’s steps to stimulate the economy
Between January and November, China’s industrial profits fell 4.7% from the same period last year, compared with a 4.3% year-on-year decline in the first 10 months of 2024.
Foreign-invested industrial firms, including those with investment from Hong Kong, Macao and Taiwan, saw profits rise 0.8% from January to November, compared with a year earlier.
Mining industry profits fell 13.2% year-on-year in the first 11 months of the year, while manufacturing profits fell 4.6%. However, the utilities industry – the supply of electricity, heating, gas and water – saw a 10.9% year-on-year rise in profits between January and November.
“With the effective implementation of existing policies, the accelerated introduction of a growth policy package, and the continued effect of policy combination, industrial output above the prescribed size increased steadily,” said Yu Weining, statistician at the National Bureau of Statistics. , according to in a Google translation of her Chinese comments.
Despite a raft of stimulus measures introduced since late September, the latest economic data from China shows the world’s second-largest economy continues to face disinflation, driven by weak consumer demand and a prolonged recession. in the property market.
China’s consumer inflation fell to a five-month low in November, while the country’s export and import data missed expectations. China’s latest retail sales data also disappointed, missing forecasts.
However, some parts of China’s economy have shown signs of recovery, with manufacturing activity expanding for two straight months and hitting a five-month high in November.
Earlier this month, China’s top officials engaged in a key economic agenda-setting meeting to round up monetary easing efforts, including cutting interest rates to support the ailing economy.
The World Bank on Thursday raised its forecast for China’s economic growth in 2024 and 2025, reflecting recent policy adjustments. It now expects China’s GDP to grow by 4.9% in 2024 compared to its previous forecast of 4.8%, while in 2025, China’s GDP is expected to grow by 4.5%, higher than its previous forecast. organization of 4.1%.
However, the World Bank warned that China’s battered property sector, along with subdued household and business confidence, will remain a drag on its growth.
