Profits at China’s industrial firms fell 2.3% in 2023, their second straight yearly decline, due to sluggish demand at home and abroad, adding pressure on economic growth amid a deep property slump and deflationary risks.
The drop followed a 4.4% profit fall in the first 11 months from the same period a year earlier, according to data from the National Bureau of Statistics (NBS) on Saturday.
Last year’s profit decline was chiefly due to sharply lower factory-gate prices, driven by over-capacity in some industries, said economist Nie Wen at Hwabao Trust in Shanghai.
Industrial profits will likely rise by between 5% and 6% this year, as a slight improvement in demand and historic lows in inventories in China, Europe, the United States and Japan will lead to a rebound in industrial prices, Nie said.
There were some signs of improvement at the end of the year. For December alone, industrial profits rose 16.8% from a year earlier, down from a 29.5% jump in November and extending gains for a fifth month.
Profits fell 4% in 2022 due to strict COVID-19 curbs.
Profits in railway, ship and aerospace transport equipment rose 22.0% in 2023, supported by growth in shipbuilding orders, NBS said in a statement. Profits of the automobile industry increased 5.9% due to record-high automobile production.
China’s economy expanded by 5.2% in 2023, but its post-pandemic recovery has been shaky, with a protracted housing downturn, mounting deflationary risks and slowing global growth casting clouds over the outlook for this year.
