China's industrial profits set for steepest annual drop since 2000

China’s industrial firms saw their profits drop in November for a fourth straight month, on track for the sharpest annual decline since records began in 2000.

 

Industrial profits at large Chinese companies fell 7.3 per cent last month compared to a year ago, the National Bureau of Statistics said in a statement on Friday. That compares with a Bloomberg Economics forecast for a decline of about 6 per cent.

 

Over the first 11 months, profits shrank by 4.7 per cent from the same period last year. 

 

The results follow Beijing’s most extensive efforts to revive the economy since the pandemic. Policymakers have cut interest rates and freed up more liquidity to encourage bank lending. Industrial profits are a vital gauge of the financial health of factories, mines and utilities, shaping their investment decisions in the months to come. 

 

Corporate finances have come under pressure as China contends with weak domestic demand and its longest stretch of deflation since 1999. Producer prices remain depressed, and retail sales were weaker in November. 

 

While signs of a tentative recovery have emerged, and China is expected to hit its growth target of around 5 per cent this year, new challenges are arising as Donald Trump prepares to take office next month. His threat of steep tariffs on Chinese goods would further disrupt the country’s export sector, which is already facing increased trade barriers from places like the European Union.