China’s Industrial Profits Decline, Posting the Largest Drop in More Than a Year

China’s Industrial Profits Decline

[People News] Chinese citizens anxiously hope for an early economic recovery, yet economic data continue to deal them blow after blow. Recently, the Chinese Communist Party (CCP) officially announced that profits of China’s industrial enterprises declined from January to November, marking the largest drop in more than a year, once again indicating that China’s economic recovery is struggling.

Data released by the CCP’s National Bureau of Statistics on Saturday (December 27) show that from January to November, industrial enterprise profits fell 13.1 percent year on year, with the decline further widening from the 5.5 percent drop recorded from January to October.

The background to this decline in industrial profits is that, despite exports of goods performing better than expected, factory-gate prices have remained in persistent deflation. Observers believe this situation has placed greater pressure on CCP policymakers, calling on them to take more measures to address long-term weak household consumption.

According to a Reuters report cited by The Dajiyuan, Xu Tianchen, a senior economist at the Economist Intelligence Unit, said that the profit data are consistent with the overall cooling trend in economic activity in the fourth quarter, mainly due to weak domestic demand dragging down China’s economy.

From January to November this year, profits of industrial enterprises above designated size increased 0.1 percent year on year, lower than the 1.9 percent growth rate from January to October, partly because profits in the coal mining and washing industry plunged by 47.3 percent.

Industrial profit data cover enterprises with annual main business revenue of at least 20 million yuan.

In an accompanying interpretation, Yu Weining, chief statistician of the CCP’s National Bureau of Statistics, stated that the international environment remains unstable with many uncertain factors, the transition between old and new industrial growth drivers still faces structural adjustment pressures, and the foundation for the recovery of industrial enterprise efficiency still needs to be further consolidated.

Even the CCP’s official data, notorious for falsification, show that China’s economic growth momentum has clearly slowed toward the end of the year. According to data released by the CCP’s National Bureau of Statistics in mid-December, the growth rate of China’s total retail sales of consumer goods fell to its slowest since 2022, while conditions in investment and the real estate market continued to deteriorate.

According to the Bank for International Settlements, since the COVID pandemic, China’s housing prices have fallen by 17 percent, and uncertainty about the economic outlook has led many ordinary households to begin tightening their belts.

In turn, this has forced companies to cut hiring and led to suppressed wages. Urban per capita disposable income is less than $700 per month, while in rural areas, as many as hundreds of millions of people survive on only a few dollars a day.

The U.S. think tank Rhodium Group predicts that, affected by a sharp decline in fixed asset investment in the second half of the year, China’s economic growth rate in 2025 will be only 2.5 percent to 3 percent, about half of the growth rate implied by official data. △