China’s Industrial Profits Continue To Dip Amid Sluggish Economic Recovery

Beijing: China’s industrial profits declined for the fourth consecutive month in November, falling 7.3 per cent year-on-year, signalling that Beijing's stimulus efforts have yet to significantly bolster corporate earnings. However, the drop was less steep than in previous months, following a 10 per cent decline in October and a 27.1 per cent plunge in September, the sharpest fall since March 2020, according to Wind Information.

Suan Teck Kin, head of research at UOB, noted that persistently weak profits are unsurprising in China’s disinflationary environment but expressed optimism about the economy’s trajectory. "The worst is over,” she said, attributing the stabilization to Beijing's extensive stimulus measures. It has likely bottomed out and is now on the path to recovery. Industrial profits are a critical barometer of the financial health of China’s factories, utilities, and mining sectors. Data for January to November revealed a 4.7 per cent decline in profits compared to the same period last year, a sharper drop than the 4.3 per cent recorded in the first ten months of 2024.

Foreign Invested Firms Saw Profits By 0.8 Percent YOY In The Same Period

Foreign-invested industrial firms, including those with investments from Hong Kong, Macao and Taiwan, saw profits dip by 0.8 per cent year-on-year during the same period. The mining sector experienced a 13.2 per cent dip in profits while manufacturing profits declined 4.6 per cent. In contrast, the utility sector—encompassing electricity, heat, gas, and water supply—reported a 10.9 per cent year-on-year profit increase.

Yu Weining, a statistician at the National Bureau of Statistics, attributed steady industrial production growth to the effective implementation of existing policies, the introduction of new measures, and the cumulative impact of policy combinations.

Despite a wave of stimulus measures introduced since late September, China’s economy faces challenges. Weak consumer demand and a prolonged property market downturn have contributed to disinflationary pressures. November data revealed consumer inflation at a five-month low, underwhelming retail sales, and disappointing export and import performance.

ALSO READ: OIL Drops Guwahati HQ Relocation Plan, Announces Major Expansion In Assam

Nonetheless, some areas of the economy have shown signs of improvement. Manufacturing activity expanded for the second consecutive month in November, reaching a five-month high. Earlier this month, Chinese officials pledged further monetary easing, including interest rate cuts, to support economic recovery.

The World Bank recently revised its growth forecast for China, projecting GDP growth of 4.9 per cent in 2024, up from an earlier estimate of 4.8 per cent. The 2025 growth forecast was also raised from 4.1 per cent to 4.5 per cent. However, the organization warned that challenges in the property sector and subdued confidence among households and businesses would continue to pose a risk to China’s economic outlook.