Daily Management Review

In 2023, China's Industrial Profits Decreased By 2.3%


As a result of weak domestic and international demand, profits at China's industrial companies dropped 2.3% in 2023—their second consecutive year of decrease. This put more pressure on economic development in the face of a severe real estate crisis and deflationary threats.
According to data released on Saturday by the National Bureau of Statistics (NBS), the decline came after a 4.4% decline in profits over the first 11 months compared to the same period the previous year.
According to economist Nie Wen of Hwabao Trust in Shanghai, overcapacity in certain industries caused a steep decrease in factory-gate pricing last year, which was the main cause of the profit decline.
According to Nie, there will likely be a 5%–6% increase in industrial earnings this year due to a minor uptick in demand and historically low inventories in China, Europe, the US, and Japan. These factors will also likely cause industrial prices to rise.
By the end of the year, some progress had been made. Industry earnings increased 16.8% in December compared to the same month last year; this is a decrease from the 29.5% increase in November, which prolonged growth for a sixth month.
In 2022, profits decreased by 4% as a result of COVID-19 limitations.
According to a statement from NBS, profits in the railway, ship, and aeronautical transport equipment industries increased by 22.0% in 2023 thanks to an increase in shipbuilding orders. The auto industry's profits rose 5.9% as a result of record-high car output.
China's economy grew by 5.2% in 2023, but the country's post-pandemic recovery has been weak. This year's prognosis is clouded by a prolonged housing slowdown, growing deflationary threats, and slower global growth.
China's central bank sent a strong signal of support for the country's collapsing stock markets and shaky economy on Wednesday by announcing that it was cutting bank reserves by 50 basis points, the largest reduction in two years.
Analysts still believe that this year will require more assistance to put the economy back on a more stable basis.
Nie predicted that China's 5% GDP goal for this year will probably not change.
"Chinese authorities will implement existing policies as soon as possible," said Nie. "Markets expect another 1 trillion yuan ($140 billion) in special treasury bonds will be issued."
Businesses with yearly revenues from their primary operations of at least 20 million yuan ($2.8 million) are included in the industrial profit figures.