China’s industrial profits fell for the fourth consecutive month in November, declining by 7.3% compared to the same period last year, highlighting ongoing challenges for the world’s second-largest economy. Despite Beijing’s efforts to stimulate growth, corporate earnings remain under pressure, reflecting a broader economic slowdown.
The November decline, while significant, marked an improvement from previous months, where profits dropped 10% year-on-year in October and plunged 27.1% in September, the steepest fall since March 2020, according to Wind Information. Analysts attribute the persistently weak profits to China’s disinflationary environment and subdued consumer demand, exacerbated by a prolonged downturn in the property market.
Suan Teck Kin, head of research at UOB, noted that the lower profits were “no surprise,” given the current economic climate. However, she expressed cautious optimism, stating that “the worst is over” for China’s economy. She pointed to the recent stimulus measures, adding, “I think it’s basically just bottomed out, and now it’s on the way up.”
Between January and November, industrial profits declined 4.7% compared to the same period last year, worsening slightly from a 4.3% drop in the first ten months of 2024. Sector-specific data showed mixed results. The mining industry experienced a 13.2% profit slump year-on-year in the first 11 months, and manufacturing profits fell by 4.6%. Conversely, the utilities sector, which includes electricity, heat, gas, and water supply, reported a robust 10.9% profit increase during the same period.
Industrial firms with foreign investments, including those from Hong Kong, Macao, and Taiwan, saw profits dip by 0.8% between January and November, reflecting the broad-based nature of the economic challenges.
Despite a slew of stimulus measures introduced since September, China’s economy continues to grapple with weak consumer demand. Consumer inflation dropped to a five-month low in November, while export and import figures missed expectations. Retail sales data also fell short of forecasts, underscoring the fragile state of domestic demand.
However, signs of recovery have started to emerge. Manufacturing activity expanded for the second consecutive month in November, reaching a five-month high. Earlier this month, top Chinese officials pledged to intensify monetary easing, including lowering interest rates, to support the economy.
The World Bank recently raised its growth forecast for China, projecting GDP growth of 4.9% in 2024 and 4.5% in 2025, up from earlier estimates. However, the organization warned that challenges in the property sector and weak business and household confidence could continue to hinder growth.
