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Published 09:06 IST, April 27th 2024

China's Industrial Profits Show Slower Growth in First Quarter

These figures contribute to a broader narrative of a somewhat uneven recovery in the Chinese economy.

Reported by: Business Desk
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China’s Industrial Growth: The latest data from China's National Bureau of Statistics (NBS) reveals that industrial profits for the first quarter of this year experienced a smaller increase compared to the first two months. The growth rate was 4.3 per cent year-on-year, in contrast to the more robust 10.2 per cent rise seen in the initial two months of the year. March specifically saw a decline of 3.5 per cent in profits compared to the same period last year.

These figures contribute to a broader narrative of a somewhat uneven recovery in the Chinese economy, despite its status as the world's second-largest. Various economic indicators for March, including retail sales and industrial output, suggest that domestic demand remains fragile despite the solid growth seen in GDP for the first quarter.

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While there were initial signs of momentum in the economy at the start of the year, concerns have emerged regarding the subdued demand within China. Officials from the central bank have also expressed caution regarding the expansion of credit, particularly as real credit demand appears to be weakening.

Industries Feeling the Impact

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Furthermore, specific industries are feeling the impact of this economic shift. For instance, despite seeing a return to profit growth in the first quarter, companies like CATL, a major Chinese electric vehicle battery manufacturer, have experienced declining revenue for consecutive quarters due to slowing demand and intensified competition.

These economic challenges have prompted credit rating agency Fitch to revise its outlook on China's sovereign credit rating to negative. Fitch cited risks to public finances amidst increasing uncertainty surrounding the country's transition to new growth models.

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It's worth noting that the industrial profit data provided by the NBS encompasses firms with annual revenue of at least 20 million yuan ($2.76 million) from their primary operations, offering insight into the performance of medium to large-scale enterprises within China's industrial sector.

With Reuters Input

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09:06 IST, April 27th 2024