China’s industrial profits drop for first time in three years due to trade war impact
- Figures fall 1.8 per cent in November from a year earlier after industrial profit growth had decelerated in each of the previous seven months
- National Statistics Bureau data is in line with other weak economic activity data for November including retail sales, industrial production and foreign direct investment
China’s industrial profits declined in November for the first time in nearly three years, reflecting the continued slowdown in the economy due largely to the effects of the trade war with the United States.
The 1.8 per cent decline last month compared to a year earlier, the first drop since December 2015, comes after industrial profit growth had decelerated in each of the previous seven months, according to data released by the National Statistics Bureau (NBS) on Thursday.
The contraction in industrial profit is in line with other weak economic activity data for November after retail sales growth slowed to a 15-year low, industrial production grew at the slowest rate in 10 years and foreign direct investment fell sharply compared to a year earlier.
This suggests the growth of the world’s second largest economy will slow further in the fourth quarter from the decade-low gross domestic product (GDP) growth rate of 6.5 per cent in the third quarter.
The figures are the only data released concerning profit for China’s industrial sector but are seen as a reliable indicator, even though they only concern state-owned and private industrial enterprises with an annual business revenue above 20 million yuan (US$2.90 million), classified as having “scaled production”.
