China’s Nov industrial profits narrow decline but 2024 likely worst year in decades
1:01 am Friday, December 27th, 2024
BEIJING (Reuters) -China’s industrial profits fell at a slower clip in November, official data showed on Friday, but the annual decline in earnings this year is expected to be the worst in over two decades due to persistently soft domestic consumption.
The world’s second-largest economy has been struggling to mount a strong post-pandemic revival, as business and household appetites for spending and investment remain subdued amid a prolonged housing downturn and fresh trade risks from the incoming U.S. administration of President-elect Donald Trump.
Industrial profits fell 7.3% in November from the same month last year, following a 10% drop in October, National Bureau of Statistics (NBS) data showed.
The narrower decline in November pointed to improved profits as recent economic stimulus measures start to have an effect, said Zhou Maohua, a macroeconomic researcher at China Everbright Bank.
The profit numbers were also in line with a slower decline in factory-gate prices in November. The producer price index fell 2.5% year-on-year versus the 2.9% drop in October.
The World Bank on Thursday revised up its 2024 economic growth forecast for China slightly to 4.9% from its June forecast of 4.8%.
Still, in the first 11 months of 2024, industrial profits declined 4.7%, deepening a 4.3% slide in the January-October period, reflecting still tepid private demand in the Chinese economy.
China’s full-year industrial profits are set to show their biggest drop in percentage terms since 2011. However, when smaller companies are included under a previous compilation methodology, this year’s profit decline is expected to the worst since at least 2000.
A spate of economic indicators released this month pointed to mixed results, with industrial output accelerating in November while new home prices fell at the slowest pace in 17 months.
The industrial sector is undergoing an uneven recovery amid insufficient demand, Zhou said, pointing to difficulties facing real estate and some related industries as evidence of this malaise.
China’s leaders vowed in a key policy meeting this month to raise the deficit, issue more debt and loosen monetary policy to maintain a stable economic growth rate. The government also recently pledged to step up direct fiscal support to consumers and boosting social security.
Beijing has agreed to issue a record $411 billion special treasury bonds next year, Reuters reported.
Profits at state-owned firms fell 8.4% in the first 11 months, foreign firms posted a 0.8% decline and private-sector companies recorded a 1% fall, according to a breakdown of the NBS data.
Industrial profit numbers cover firms with annual revenues of at least 20 million yuan ($2.7 million) from their main operations.
($1 = 7.2988 Chinese yuan renminbi)
(Reporting by Yukun Zhang, Qiaoyi Li and Ryan Woo; Editing by William Mallard and Shri Navaratnam)
