China’s industrial profits see steepest decline since COVID-19 pandemic

Industrial profits in China dropped by 27.1% year-on-year in September, marking the sharpest decline of 2024, according to data from the National Bureau of Statistics of China (NBS).

This drop follows a 17.8% decrease in August, as the world’s second-largest economy continues to face sluggish growth, weak demand and challenges in its real estate sector.

Industrial profits fall amid economic struggles

The significant drop in profits, the largest since March 2020, underscores the difficulties faced by Chinese industrial companies.

The NBS reported that industrial firms with annual revenues exceeding 20 million yuan (approximately $2.81 million) saw total profits reach 5.228 trillion yuan ($742.6 billion) between January and September. However, September’s figures highlighted the ongoing strain on the sector.

State-owned and private firms both see declines

In September, profits for state-owned enterprises fell by 6.5%, while private-sector firms recorded a 9.6% decline.

Overall, industrial profits for the first nine months of the year were down 3.5% compared to the same period in 2023, reversing the 0.5% growth seen earlier in the year.

Challenges remain despite Chinese government’s stimulus efforts

While Chinese authorities have introduced several stimulus measures in recent weeks aimed at boosting economic growth, the impact has yet to be reflected in the real economy.

The NBS highlighted that deflationary pressures and weak domestic demand are key factors hindering profitability, particularly in sectors like upstream materials and automobiles