Major Chinese Industrial Companies Experience Profit Drop in 2023

Economic Factors Contributing to Declining Profits

Big industrial enterprises in China faced a downturn in profit in 2023, a manifestation of corporate struggles due to dropping prices and frail demand both domestically and internationally. This revelation comes from latest financial reports published by the National Bureau of Statistics, according to our sources at Reader Wall.

Comparing Yearly and Monthly Profit Trends

According to data released, the annual profits of large-scale Chinese industrial firms fell by 2.3% in 2023 compared to the previous year. There was, however, a contrasting spike towards the end of the year, with December witnessing a steep 16.8% profit increase compared to the same month in 2022. Notably, this growth-rate was slower than November’s 29.5% surge. These end-of-year trends highlight a recovery in output areas where the Covid pandemic had led to widescale manufacturing shutdowns.

Growth and Stimulus Measures

In spite of China’s steady 5% growth in 2023, an anticipated post-pandemic boom failed to happen due to an ongoing slump in the property market, putting a drag on China’s robust economy. This spurred Beijing to step up efforts to bolster growth without resorting to ‘big’ stimulus measures.

Signs of Recovery

Industrial profits have been showing signs of recovery since the summer of 2023, pointing to the fact that many firms are nearing the end of a cycle marked by de-stocking. More positive indicators include a 6.8% expansion in industrial output in December, the highest rate since 2021. Additionally, the year-on-year decrease in producer prices slowed from November, mitigating the impact on profitability.

Observable Deflation and the Need for Continuous Stimulus

However, increased signs of deflation are emerging across China, casting a shadow on the sustainability of this profit surge in the industrial sector. This continues to place pressure on government authorities to maintain the flow of stimulus measures. Economists have predicted ongoing cuts to the reserve ratio throughout the year, alongside minor policy-rate reductions. The People’s Bank of China has hinted at more targeted stimulus measures designed to funnel money towards the most impacted sectors of the economy.

More reports like this are available from the Reader Wall source.