China's Industrial Profits Decline 3.3% In 2024, Marking Third Consecutive Year Of Losses

BEIJING: Profits for industrial companies in China declined for the third consecutive year in 2024, as reported by official data on Monday, highlighting the need for policymakers to enhance support for an economy confronting tariff risks from the new Trump administration. According to data from the National Bureau of Statistics (NBS), industrial profits increased by 11 per cent in December compared to the same month in the previous year, after a decline of 7.3 per cent in November. The entire year, profits at industrial companies decreased by 3.3 per cent, following a 4.7 per cent drop in the January-November timeframe, according to NBS data. This contrasts with a 2.3 per cent drop in 2023.

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China's industrial profits decline third consecutive year

China's GDP increased by 5 per cent last year, meeting the official goal after significant government stimulus efforts. However, the economy has faced challenges from a faltering property market, declining domestic demand, and weak business confidence. Factory-gate prices in 2024 continued to decline for the second consecutive year, official data indicated, impacting corporate profits and worker earnings. In the latter half of the year, policymakers implemented several rounds of economic stimulus initiatives, including the expansion of a trade-in program for consumer goods to boost demand. Economic data for December, published earlier this month, showed uneven growth, as industrial output surpassed retail sales while the unemployment rate edged upwards.

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Exports picked up speed in December, partly driven by manufacturers hurrying to send stock abroad in anticipation of increased trade uncertainties under the Trump administration. U.S. President Donald Trump, who assumed office on January 20, announced the following day that his administration was considering a 10 per cent punitive tariff on imports from China. According to a breakdown of the NBS data, profits for state-owned enterprises decreased by 4.6 per cent in 2024, while profits for foreign firms declined by 1.7 per cent, and private-sector companies experienced a 0.5 per cent increase in earnings. Industrial profit figures pertain to companies that generate a minimum of 20 million yuan ($2.74 million) in annual revenue from their core activities.