Chinese industrial enterprises saw the largest drop in profits since April last year, with a significant 17.8% year-on-year decrease in profits from large-scale industrial enterprises in August. Experts point out that consumer demand remains weak, and the foundation for the recovery of industrial enterprise profitability still needs to be strengthened.
On September 27, the National Bureau of Statistics of the Communist Party of China released the latest statistics on profits from large-scale industrial enterprises. Large-scale industrial enterprises are defined as those with annual main business revenues of 20 million yuan or more.
The data shows that from January to August, the total profits of large-scale industrial enterprises nationwide amounted to 4.5273 trillion yuan, an increase of 0.5% year-on-year, which is a decrease of 3.1 percentage points compared to the previous period.
In August alone, profits from large-scale industrial enterprises saw a significant 17.8% year-on-year decline, dropping by 21.9 percentage points compared to the previous period of 4.1%, ending a four-month trend of year-on-year growth and reaching the lowest point since May 2023.
Yue Weining, a statistician from the Industrial Department of the National Bureau of Statistics, stated that the slower profit growth of large-scale industrial enterprises from January to August was influenced by factors such as insufficient effective market demand, as well as significant impacts from natural disasters like high temperatures and heavy rainfall in certain regions. In addition, the base number in August was significantly higher compared to July, leading to the decline.
Yue Weining emphasized that domestic consumer demand remains weak, and the external environment is complex and ever-changing, necessitating the continued consolidation of the foundation for the recovery of industrial enterprise profitability.
Economist David Qu from Bloomberg stated, “The deterioration of the industrial sector, sluggish growth data, and signs of looming monetary tightening risks may prompt top-level decision-makers to intensify stimulus measures.”
Taiwan’s financial news giant, Juhong.com, commented that the declining profit margins reflect the fragility of the overall economy in the absence of strong domestic demand. Producer prices have been declining since the end of 2022, exacerbating concerns about monetary tightening in China.