China industrial profits decline more slowly in November

Despite the narrower decline, full-year industrial profits in 2024 were still on track to post their steepest percentage drop since at least 2000 when using broader historical measures, according to Reuters.

The improvement in November reflected the initial impact of government stimulus measures, analysts said, with the narrowing profit contraction aligning with a slower decline in producer prices.

November’s producer price index fell 2.5% year-on-year, easing from a 2.9% drop in October.

However, the industrial sector in the world's second-largest economy was still facing an uneven recovery due to insufficient domestic demand and ongoing challenges in real estate and related industries.

From January to November, industrial profits declined 4.7%, a deeper contraction than the 4.3% decrease recorded in the first 10 months of the year.

The figures highlighted persistently weak private consumption and investment, compounded by a prolonged housing downturn and international trade risks.

China’s economic outlook for 2024 was slightly upgraded by the World Bank this week, which raised its growth forecast to 4.9% from 4.8%.

Nonetheless, this year’s industrial profit performance underscored broader economic challenges, with Reuters reporting that profits at state-owned enterprises dropped 8.4% in the first 11 months, while foreign firms and private companies posted declines of 0.8% and 1%, respectively.

Beijing had responded to the country’s economic challenges with aggressive fiscal and monetary measures aimed at stabilising growth.

They included a record $411bn in special treasury bonds slated for issuance in 2025 and increased direct fiscal support for consumers.

Policymakers had also pledged to raise the deficit and expand social security measures to bolster domestic demand.

Reporting by Josh White for Sharecast.com.