On October 27, 2024, China reported its largest monthly decline in industrial profits, with a drop of 27.1% in September compared to the same month last year, according to the National Bureau of Statistics (NBS). This decline follows a 17.8% decrease in August and contrasts with a 0.5% increase observed from January to August of this year.
The significant drop in September has resulted in a 3.5% decline in profits for the first nine months of the year, highlighting ongoing economic challenges, as the third quarter recorded the slowest growth since early 2023. The real estate sector, in particular, continues to struggle, prompting the government to consider measures to stimulate the economy.
In this difficult economic context, China is facing deflationary pressures, a slowdown in export growth, and reduced credit demand, underscoring the urgency for more robust fiscal measures to revive economic recovery.
The automotive industry has been notably affected, with profits down 21.4% year-on-year to 30.5 billion yuan in August, according to the China Passenger Car Association.
In response to the weakening economy, the Chinese Finance Minister has pledged to introduce additional fiscal stimulus, although no specific figures have been disclosed. This commitment follows a recent announcement by the central bank regarding significant monetary support measures, the most substantial since the pandemic.
A breakdown of profits by ownership type reveals that state-owned enterprises experienced a 6.5% decline from January to September. In contrast, foreign enterprises saw a slight profit increase of 1.5%, while private sector companies experienced a minor decrease of 0.6%.
The industrial profit data encompasses companies with annual revenues from their primary activities of at least 20 million yuan (approximately 2.8 million dollars). The current exchange rate is 1 dollar to 7.0746 Chinese renminbi.