Author: Qiaoyi Li, Joe Cash, Liangping Gao
BEIJING (Reuters) – China’s October industrial profits pared previous declines, helped by a lower base from the previous year, official data showed on Wednesday, but headwinds for imports remain as the economy continues to suffer from weak demand and deflationary pressures. It turned out to be stiff.
China’s broad industrial sector, which includes mining, processing and manufacturing companies, is struggling to remain profitable at a time when domestic demand has been hit by years of real estate crisis, unemployment and rising trade tensions.
Policymakers have pledged to meet the government’s gross domestic product (GDP) growth target of about 5% this year, but the $19 trillion economy is still lagging.
National Bureau of Statistics (NBS) data showed industrial profits fell 10% in October compared to the same period last year, better than the 27.1% decline in September, but profits for the first 10 months were down 4.3% compared with a 3.5% decline in the January-September period. I did it. .
NBS statistician Yu Weining said in an accompanying statement that profits for most industries improved compared to the previous month, with new drivers such as equipment and high-tech manufacturing playing a strong supporting role.
But some private-sector economists thought the October improvement was partly due to the low base effect from a year ago. Industrial profits increased by 2.7% in October 2023, easing from the double-digit increase in August and September last year.
Lin Song, chief economist in charge of Greater China at ING, said, “Just looking at the monthly data for October, there is a lot of noise due to the base effect compared to the previous year, and the difference can be largely attributed to this.”
“Overall, profits for the year are still under some pressure, down 4.3% year-on-year, but there is hope that the operating environment will become more favorable next year as more policy easing begins.”
deflation pressure
Individual economic indicators earlier this month pointed to weak demand overall, with consumer prices at their weakest in four months, industrial production continuing to decline and new home prices falling at the fastest pace in nine years.
Data from earlier this month showed producer prices fell 2.9% in October from a year ago, bigger than the 2.8% decline the previous month and worse than the 2.5% decline expected. It recorded the largest decline in 11 months.
Interplant deflation has intensified in oil and natural gas extraction, oil and coal processing, chemical manufacturing, and automobile manufacturing.
