According to official data from the Communist Party of China, industrial enterprise profits have decreased by 4.7% year-on-year in the first 11 months of this year, with the decline further widening. In November, industrial enterprise profits decreased by 7.3% year-on-year, marking the fourth consecutive month of decline.
On December 27, the National Bureau of Statistics of China released data showing that in the first 11 months, profits of national-scale industrial enterprises decreased by 4.7% to 666.7 billion yuan (RMB), an increase of 0.4 percentage points compared to the 4.3% decline in the first 10 months of this year.
In the first 11 months, the total profits in the mining industry reached 1.07962 trillion yuan, a 13.2% decrease year-on-year; the manufacturing industry recorded total profits of 4.85249 trillion yuan, a 4.6% decrease; and the profits in the electricity, heat, gas, and water production and supply industry totaled 735.37 billion yuan, marking an increase of 10.9%.
The decline in industrial enterprise profits in the first 11 months compared to the previous 10 months has further emphasized the economic weakness attributed to sustained weak demand, deflation risks, and a sluggish real estate market.
Additionally, in November alone, profits of national-scale industrial enterprises decreased by 7.3%, marking the fourth consecutive month of decline. In August, profits decreased by 17.8% year-on-year, followed by a 27.1% decline in September and a 10% decline in October.
Wen Bin, Chief Economist of Minsheng Bank Research Institute, pointed out that the imbalance between supply and demand is a prominent contradiction in the industrial sector, and uncertainties in external demand and weak domestic demand will constrain the growth of industrial enterprise profits.
Zhang Jingjing, Macro Analyst at China Merchants Securities, noted that domestic effective demand needs further improvement, and infrastructure investment is under pressure amid debt concerns. Furthermore, the increased uncertainty in external demand may impact the equipment manufacturing industry. Thus, the performance of the real estate, infrastructure, and manufacturing – the three major domestic demand chains – still needs to be observed closely.