China’s Industrial Profits Suffer Steepest Drop on Record
China’s industrial profits fell 14% year-on-year in the first two months of 2019, marking the steepest drop since official monthly data on the subject became available in October 2011.
Over the first two months of this year, the total profits of the country’s industrial sector slumped to 708 billion yuan ($105 billion), according to data released on Wednesday by the National Bureau of Statistics (NBS).
In China, January and February economic data are usually combined to reduce distortion caused by the weeklong Lunar New Year holiday, which typically falls in the first two months of the year.
The drop in profits was mostly due to the declining profits of major industries, said Zhu Hong, a senior statistician of the NBS. If the automotive, oil processing, nonferrous metals and chemical manufacturing industries had been excluded from the data, China’s industrial profits would have grown 0.2% year-on-year.
This year’s Lunar New Year holiday impacted the production and operation of industrial enterprises for a longer period than it did last year, Zhu said, adding that growth of industrial production and sales have also slowed, contributing to the profit decline to some extent.
Still, there were some sectors that outperformed. The iron ore mining, transport equipment, machinery and consumption sectors posted profit growth over the first two months of this year. “Upstream sectors had a great time over the past three years thanks to the supply-side reform and the property up-cycle,” said economists of Macquarie Capital Ltd., adding that the industry will come under more pressure in the coming quarters as the supply-side reforms fade and the housing market continues to cool.
Analysts also predicted that the decline in industrial profits will turn around in March. “For industrial profit growth, we view a short-lived rebound as likely in March due to last year’s low base, but the downcycle should resume in April and May as the economy slows,” Nomura analysts said in a note.
The weak profit data is further evidence of weakening growth momentum, the Nomura analysts said, adding that they maintain their forecast for real gross domestic product (GDP) growth to slow to 6.2% year-on-year in the first quarter and further to 5.7% year-on-year in the second quarter.
China’s GDP expanded by 6.6% in 2018, the lowest rate since 1990, underscoring growing economic headwinds. While reducing taxes and fees, China lowered the official economic growth target for 2019 to a range of 6% to 6.5%, compared with a target of around 6.5% for 2018. It was only the second time that China has set a growth target in the form of a range — the first was in 2016.
Contact reporter Timmy Shen (firstname.lastname@example.org)
Feb 17 17:15
Feb 17 14:38
Feb 17 13:20
Feb 17 12:20
Feb 15 11:02
Feb 14 18:07
Feb 14 13:36
Feb 14 10:42
Feb 13 13:34
- 1Coronavirus Latest (Feb. 1 - 15): Cases Surge Past 66,500 as France Reports First Death
- 2Coronavirus Study Finds Incubation Period of Up to 24 Days
- 3Even With Massive Funding, Coronavirus Vaccine Isn’t Coming Soon
- 4Coronavirus Sunday Update: Taiwan Reports First Death, Wuhan Virology Institute Denies Rumors
- 5Intensive Care Doctor Tells of a Hospital Teetering on Collapse in Wuhan
- 1Power To The People: Pintec Serves A Booming Consumer Class
- 2Largest hotel group in Europe accepts UnionPay
- 3UnionPay mobile QuickPass debuts in Hong Kong
- 4UnionPay International launches premium catering privilege U Dining Collection
- 5UnionPay International’s U Plan has covered over 1600 stores overseas