Beijing: China’s industrial profits showed signs of improvement in November, with a slower year-on-year decline of 7.3%, compared to a sharper 10% fall in October, according to data from the National Bureau of Statistics (NBS) released on Friday. The data signals a modest reprieve for the embattled industrial sector, though domestic demand remains weak, delaying a comprehensive recovery.
Persistent Economic Challenges
The world’s second-largest economy continues to grapple with subdued consumer and business spending, compounded by a prolonged housing market downturn and uncertainties tied to trade policies under the incoming U.S. administration of President-elect Donald Trump.
The narrowing profit decline reflects early signs of effectiveness from recent government stimulus measures, said Zhou Maohua, a macroeconomic researcher at China Everbright Bank. This trend aligns with November’s slower fall in factory-gate prices, where the producer price index (PPI) dropped 2.5% year-on-year, improving from October’s 2.9% decrease.
Mixed Signals from Economic Indicators
While industrial output accelerated in November, other indicators point to persistent challenges. For instance, new home prices fell at their slowest pace in 17 months, indicating ongoing strains in the real estate sector, which has broader implications for related industries.
Industrial profits for the first 11 months of 2024 fell 4.7%, deepening from a 4.3% decline seen in the January-October period. This reflects tepid private demand despite targeted economic interventions.
“The industrial sector is witnessing an uneven recovery, with insufficient demand and continued difficulties in the real estate market,” Zhou noted.
Policy Support and Fiscal Measures
In response, Chinese policymakers have outlined plans to bolster economic stability. At a key policy meeting this month, leaders pledged to increase the fiscal deficit, issue additional debt, and implement more accommodative monetary policies. Among these measures, Beijing has committed to issuing a record $411 billion in special treasury bonds in 2024.
The government has also vowed to enhance fiscal support for consumers and expand social security measures to stimulate spending and provide economic relief.
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Breakdown of Industrial Profit Declines
A detailed analysis of NBS data revealed the following year-to-date profit changes through November:
- State-owned enterprises: Down 8.4%
- Foreign firms: Down 0.8%
- Private-sector companies: Down 1%
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Final thoughts
Despite improved November figures, the broader challenges facing China’s industrial sector underscore the complexities of sustaining a recovery. As Beijing rolls out additional fiscal and monetary policies, the effectiveness of these measures in boosting demand and stabilizing the economy will be crucial in the months ahead.
