China's Industrial Profits Experience Sharpest Monthly Decline
According to the latest official figures released on Sunday, China experienced the steepest monthly decline in industrial profits this September. The National Bureau of Statistics (NBS) reported a decrease of 27.1% compared to the same month last year. This decline followed a drop of 17.8% in August and contrasts with a 0.5% increase observed from January to August this year.
The significant drop in September reduced earnings by 3.5% for the first nine months of the year. This performance indicates that the economic challenges faced by the country are ongoing, with the third quarter of 2023 showing the slowest growth since the beginning of the year. Particularly, the real estate sector is struggling to stabilize, prompting the government to take action to revitalize the economy.
Amid these economic challenges, China is experiencing deflationary pressures, a slowdown in export growth, and a decrease in credit demand. These factors underscore the urgency for stronger fiscal measures to kickstart economic recovery.
The automotive sector is among the hardest hit by the economic slowdown. According to a report from the China Passenger Car Association, profits fell by 21.4% year-on-year in August, reaching 30.5 billion yuan.
In response to the weakening economy, China's finance minister committed to introducing more fiscal stimulus. However, no specific figures were disclosed. This commitment followed the central bank's recent announcement of the most significant monetary support measures since the pandemic.
The distribution of profits by type of ownership indicates that state-owned enterprises experienced a decline of 6.5% from January to September. In contrast, foreign firms saw a slight increase of 1.5% in their earnings, while private sector companies faced a marginal decrease of 0.6%.
Industrial profit data cover companies with annual revenues of at least 20 million yuan (approximately $2.8 million) from their main operations. The current exchange rate is 1 USD = 7.0746 Chinese yuan renminbi.