Industrial Profits Decline in China Amid Tariff Threats
Beijing, China - Industrial profits in China have experienced a third consecutive year of decline, according to official data released on Monday. The National Bureau of Statistics (NBS) reported an 11% increase in profits in December compared to the same month last year, following a 7.3% drop in November.
Despite this modest improvement, overall industrial profits dropped by 3.3% in 2024, deepening the 4.7% decline witnessed during the January-November period. This marks a significant slowdown compared to the 2.3% decline observed in 2023.
The data underscores the challenges facing China's economy, which grew by 5% last year but has been hampered by a sluggish property market, weak domestic demand, and fragile business confidence. Factory-gate prices continued to decline for a second consecutive year, eroding corporate profits and workers' incomes.
In response, policymakers implemented multiple economic stimulus measures in the second half of 2024, including expanding a consumer goods trade-in scheme to boost demand.
While December economic data showed signs of imbalanced growth, with industrial output outperforming retail sales and unemployment rate ticking higher, exports gained momentum. This was partly driven by factories rushing inventory overseas to mitigate potential trade risks under the new Trump administration.
President Donald Trump announced on January 21st that his administration was considering a 10% punitive duty on Chinese imports.
According to the NBS data breakdown, profits at state-owned firms dropped 4.6% in 2024, while foreign firms saw a decline of 1.7% and private-sector companies recorded a modest 0.5% increase.
Industrial profit numbers include firms with annual revenues of at least 20 million yuan ($2.74 million) from their primary operations.