Heaps of coal at the port of Rizhao in China’s Shandong province on November 2, 2021.
VCG | Visual China Group | Getty Images
China’s industrial profits extended the decline to the fourth consecutive month, falling 7.3% This suggests that Beijing’s stimulus measures have not yet been effective in halting the decline in corporate profits.
However, the decline in profits was smaller than the declines in previous months. She had fallen by 10% year-on-year in October after one Fall of 27.1% in September – their steepest decline since March 2020, according to wind information.
It’s “no surprise” about continued lower industrial profits, especially in China’s disinflationary environment, said Suan Teck Kin, head of research at UOB.
However, given the stimulus programs, “the worst is over” for China’s economy, she added. “I think we’ve basically just bottomed out and now things are looking up,” he told CNBC’s “Street Signs Asia.”
Industrial profits are an important indicator of the financial well-being of factories, utilities and mines in China. The results show how corporate balance sheets are faring following Beijing’s moves to stimulate the economy.
Industrial companies with foreign investments, including those with investments from Hong Kong, Macau and Taiwan, posted a 0.8% year-on-year profit decline in January-November.
“With the effective implementation of existing policies, the accelerated introduction of a package of gradual policies and the sustained effect of the policy combination, industrial production has steadily grown beyond the intended size,” said Yu Weining, a statistician at National Statistics Office, according to a Google translation of her comments in Chinese.
Despite numerous economic stimulus measures since the end of SeptemberRecent economic data from China suggests the world’s second-largest economy continues to grapple with disinflation driven by weak consumer demand and a prolonged downturn in the real estate market.
Consumer inflation in China has fallen to its lowest level in five months in November, while the Country export and import data Expectations missed. China’s Recent retail sales also disappointedmissing forecasts.
However, some parts of China’s economy are showing signs of recovery and manufacturing activity is increasing two months in a row and reached a five-month high in November.
Earlier this month, China’s top officials made the commitment an important meeting to set the economic agenda to step up monetary easing efforts, including cutting interest rates, to support the struggling economy.
The The World Bank on Thursday raised its forecast for China’s economic growth for the year 2024 and 2025, reflecting recent policy adjustments. It now expects China’s GDP to grow by 4.9% in 2024, compared to the previous forecast of 4.8%, while China’s GDP is expected to grow by 4.5% in 2025, which is over the organization’s previous forecast of 4.1%.
However, the World Bank warned that China’s struggling real estate sector, along with subdued household and business confidence, would continue to pose headwinds to its growth.
