Piles of coal at Rizhao port in China’s Shandong Province on Nov. 2, 2021.VCG | Visual China Group | Getty Images
China’s industrial profits declined for a fourth straight month, falling 7.3% in November from a year earlier, indicating that Beijing’s stimulus measures have yet to halt the slide in corporate earnings. However, the drop was less than the declines in the previous months.
The persistently lower profits faced by industrial companies, especially in China’s disinflationary environment, is no surprise, said Suan Teck Kin, head of research at UOB. He believes the worst is over for China’s economy, stating that it has “basically just bottomed out, and now it’s on the way up”.
Industrial profits are a key indicator of the financial well-being of factories, utilities, and mines in China. Between January and November, China’s industrial profits fell 4.7% from the same period last year, compared to a 4.3% drop year-on-year in the first 10 months of 2024.
Industrial firms with foreign investments, including those with investments from Hong Kong, Macao, and Taiwan, saw profits dip 0.8% from January to November compared to a year ago. The mining industry’s profits slumped 13.2% year on year in the first 11 months of the year, while manufacturing profits dropped 4.6%. However, the utilities industry saw a 10.9% year-on-year increase in profits.
Despite a slate of stimulus measures, China’s economy continues to grapple with disinflation, driven by weak consumer demand and a prolonged downturn in the property market. However, some parts of the economy have shown signs of recovery, with manufacturing activity expanding for two months in a row and hitting a five-month high in November.
The World Bank has raised its forecast for China’s economic growth in 2024 and 2025, reflecting recent policy adjustments. It now expects China’s GDP to grow 4.9% in 2024 and 4.5% in 2025, although it cautioned that the embattled property sector and subdued household and business confidence will remain headwinds to its growth.
