China’s industrial profits continued their downward trend for a fourth consecutive month in November, falling by 7.3% year-on-year. This ongoing decline, although less severe than the 10% drop in October and the 27.1% plunge in September, highlights the limited impact of Beijing’s stimulus efforts on stabilizing corporate earnings.
Suan Teck Kin, UOB’s head of research, noted the persistent profit decline isn’t unexpected given China’s disinflationary climate. However, she suggested the economy might have reached its nadir, with signs of recovery emerging due to recent stimulus initiatives, indicating a potential turnaround.
Industrial profits are a crucial barometer for the financial performance of various sectors, including manufacturing, utilities, and mining in China. They offer insights into the corporate landscape’s health following Beijing’s economic interventions.
Earlier this month, the government officials pledged to intensify monetary easing, including interest rate cuts, to bolster the economy.
In addition, the World Bank recently revised China’s economic growth forecasts upwards for 2024 and 2025, acknowledging the impact of policy shifts, with projections now pointing at a 4.9% GDP growth for 2024, up from the previous 4.8%, and an increase to 4.5% in 2025 from an earlier estimate of 4.1%.
Meanwhile, the organization warned that challenges in China’s property market and dampened household and business confidence could continue to impede growth.
