China’s industrial firms report third consecutive year of profit decline amid tariff threats
Profits for China’s industrial firms fell for the third straight year in 2024, highlighting the urgent need for policymakers to enhance support for an economy facing potential tariff threats from the new Trump administration.
Official data released on Monday by the National Bureau of Statistics (NBS) revealed that while industrial profits grew by 11% in December compared to the same month last year, they experienced a 3.3% decline over the entire year, following a 4.7% drop in the January-November period, worsening from a 2.3% decline recorded in 2023.
China’s GDP achieved a 5% growth last year, meeting the official target, largely due to extensive government stimulus measures.
However, the economy continued to grapple with a sluggish property market, weak domestic demand, and fragile business confidence. Factory-gate prices have also faced declines for a second consecutive year, adversely affecting corporate profits and workers’ incomes.
In response to these challenges, policymakers implemented several rounds of economic stimulus in the latter half of the year, including an expanded consumer goods trade-in scheme to boost demand. Recent economic data indicated uneven growth, with industrial output outpacing retail sales and an uptick in the unemployment rate.
Exports showed signs of recovery in December, partly driven by factories rushing to ship inventory abroad in anticipation of increased trade risks under the Trump presidency. On January 21, President Donald Trump announced that his administration was considering a 10% punitive duty on Chinese imports.
According to the NBS data, profits at state-owned firms fell by 4.6% in 2024, while foreign firms saw a 1.7% decline.
Private-sector companies reported a modest 0.5% increase in earnings. The industrial profit figures pertain to firms with annual revenues of at least 20 million yuan ($2.74 million) from their primary operations.
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