Chart of the Day: China’s Industrial Profits Shrink Again

China’s industrial profits shrank further in December amid slumping factory inflation and sluggish economic growth, official data showed Monday.

Total profits of China’s major industrial firms fell 1.9% year-on-year in December to 680.8 billion yuan ($101.2 billion), according to data (link in Chinese) released by the National Bureau of Statistics (NBS). The fall in December was 0.1 percentage point lower than in November, which marked the first time China’s industrial profits had shrunk since December 2015, according to the NBS.

China’s factory inflation in December, tracked by the official producer price index, plunged to its lowest level since September 2016, according to the NBS. Analysts said that recent drops in oil prices, a high base for comparison and cooling domestic demand were behind the slump in factory inflation.

For the full year of 2018, total industrial profits rose 10.3% to 6.64 trillion yuan, according to the NBS. Last year’s growth rate came in below the previous year’s rate of 21%, but was higher than the 8.5% expansion in 2016.

Of 41 industries surveyed, the NBS said (link in Chinese) that 32 reported higher profits than the previous year, with upstream sectors as the main drivers of profit growth. For example, the oil and gas production industry’s profit surged 4.4 times from the previous year.

In addition, the central government’s deleveraging campaign bore fruit as the debt-to-asset ratio of major industrial enterprises declined to 56.5% at the end of 2018, down 0.5 percentage points from the year earlier, according to the NBS.

Contact reporter Charlotte Yang (yutingyang@caixin.com)