In September 2023, China’s industrial profits plunged at the fastest rate since the onset of the COVID-19 pandemic, according to data from the National Bureau of Statistics. This decline was marked by a 27.1% drop compared to the previous year, following a 17.8% fall in August. The downturn reflects the economic challenges China faces, including sluggish growth, weak demand, and an ongoing property crisis. The steep decline in industrial profitability underscores the need for robust policy interventions, as emphasized by Goldman Sachs chief China economist Hui Shan.
The first nine months of 2023 saw industrial profits decrease by 3.5% year-on-year, exacerbated by lower producer prices and insufficient demand, according to NBS statistician Yu Weining. September’s producer price index dropped 2.8% annually, following a 1.8% decline in August, indicating significant deflationary pressures.
Economists argue that China’s industrial sector urgently requires demand-driven policies, particularly as stress accumulates in sectors like upstream materials and automobiles, as noted by Gary Ng of Natixis.
Despite these challenges, China’s economy grew by 4.6% in the third quarter, the slowest rate since early 2023, leading to an overall expansion of 4.8% in the first three quarters—slightly below the government’s 2024 target of 5% growth.
Attention now turns to the upcoming release of the official manufacturing purchasing managers’ index (PMI) for October. Economists, as polled by Reuters, predict that the PMI will reach 50.1, potentially halting a series of contraction months. Previous PMI figures were 49.8 in September, 49.1 in August, 49.4 in July, and 49.5 in June—a reading above 50 would signal expansion, offering a glimmer of hope for a manufacturing sector eager for recovery. To rejuvenate its economy, China is set to unveil details of a highly anticipated fiscal stimulus following the nation’s parliament meeting next month.
Original Story https://www.cnbc.com/2024/10/28/chinas-industrial-profits-plunge-at-fastest-pace-since-since-the-pandemic.html
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