Daily Management Review

Fall In Raw Material Prices Results In Drop In China’s Industrial Profit Growth


Fall In Raw Material Prices Results In Drop In China’s Industrial Profit Growth
Profits for China's industrial enterprises expanded at a significantly slower rate in November, according to the statistics bureau, owing to falling raw material prices, a sagging housing market, and weaker consumer demand.
In November, profits increased 9.0 per cent year on year to 805.96 billion yuan ($126.54 billion), a far cry from the 24.6 per cent increase reported in October.
The earnings of industrial enterprises increased 38.0 per cent year on year to 7.98 trillion yuan in January-November, slower than the 42.2 per cent increase in the first ten months of 2021, according to the statistics bureau.
While state attempts to calm skyrocketing wholesale prices in November relieved financial pressure on downstream industries, the impact of the mining and raw material sectors on total profit growth diminished, according to Zhu Hong, senior statistician at NBS.
“But companies still face great cost pressures, and the improvement in profits for downstream sector needs to be further consolidated,” Zhu said in a statement accompanying the data release.
China's scorching factory-gate inflation eased marginally in November, owing to government measures against out-of-control commodity prices and a relieving power shortage as Beijing sought to mitigate the debilitating economic effects of rising expenses.
As a property crisis intensifies, supply bottlenecks remain, and severe Covid-19 limitations impact consumer spending, the world's second-largest economy, which has lost steam following a robust recovery from the pandemic last year, confronts many hurdles.
The steel industry has been harmed by the country's property crisis, while demand for cement, glass, and household goods remains low.
China's top leaders agreed to stabilize the economy and keep growth within a tolerable range in 2022 during a critical agenda-setting conference this month.
The People’s Bank of China this month cut the amount of cash that banks must hold in reserve and lowered the one-year benchmark lending rate to stimulate growth.
The industrial profit data is for major companies with annual revenue of more than 20 million yuan from their primary operations.