Compared to the same month last year, industrial companies' profits decreased by 10% in October. While industrial profits have slowed down, falling 27.1 percent in September and 17.8 percent in August, the downward trend is still present.
Total profit decreased by 4.3 percent in the first 10 months of the year compared to the same period last year; it deepens the 3.5 percent decline in the January-September period. The loss in profitability was calculated as 8.2 percent in state-owned enterprises and 1.3 percent in private sector companies.
Weak Domestic Demand and Its Effect on Economic Growth
The decline in industrial profitability indicates China is facing structural issues based on weak domestic demand, pressure from deflation, and issues in the real estate market.
Despite the economic incentive and stimulus measures announced by the government since the end of September, the effects of the policies have not yet been reflected in the real economy.
The Chinese government's 2024 "growth of around 5 percent" target was not met by the Chinese economy, which expanded by 4.8 percent in the first nine months of the year.
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