Chinese businesses face falling profits

China's National Bureau of Statistics released data showing that profits of major domestic industrial enterprises fell 27.1% year-on-year in September 2024.

Chinese businesses face declining profits. (Source: Reuters)

The decline was up 9.3 percent from August of the same year, indicating that recessionary and deflationary pressures are increasing, weakening the financial health of businesses.

The decline in profits is believed to reflect the impact of the high thresholds that establishments reached in the same period last year. In the first nine months of 2024, the profits of industrial enterprises decreased by 3.5% compared to the previous year, showing a not very bright picture for the world's second-largest economy.

Industrial profits are a key indicator of the financial health of factories, mines and utilities. Weakening earnings could weigh on investment decisions in the coming months as investors weigh risks and opportunities in a volatile economic environment.

China’s factory prices fell for a 24th straight month in September, according to Bloomberg Economics, reflecting weak domestic demand and adding to concerns about the economy’s resilience.

Despite some signs of improvement in September, including better industrial performance and rising consumption, economic growth slowed to 4.6% year-on-year in the third quarter of 2024, the slowest since March 2024, highlighting the major challenges facing the Chinese economy.

Against this challenging backdrop, the Chinese government has stepped up stimulus measures, including interest rate cuts and property market reforms, to boost growth. A rare bright spot in the economic picture has been the growth of the high-tech sector, with profits for manufacturers in the sector rising 6.3% in the January-September period.

The decline in profits of China’s industrial enterprises in September 2024 reflects the major challenges facing the economy, and government stimulus measures will play a vital role in supporting economic recovery and growth in the future.

Source: https://baoquocte.vn/ap-luc-kinh-te-doanh-nghiep-trung-quoc-doi-mat-voi-suy-giam-loi-nhuan-291581.html