China’s industrial profits set for rebound in 2024, increase as much as 11% due to improved US export outlook
- Total profits at industrial enterprises with annual revenue of at least 20 million yuan (US$2.8 million) from their main operations fell by 2.3 per cent last year
- But improved external demand could see profits increase by between 7 and 11 per cent this year, after industrial output also grew by 6.8 per cent in December
Profits at China’s largest industrial enterprises, having suffered their second straight yearly decline in 2023, are expected to see a moderate rise this year thanks to an improved export outlook and Beijing’s supportive policies.
An improvement in external demand led by stock replenishment from the United States would partly help drive further recovery of industrial profits in the world’s second-largest economy in 2024, analysts said.
Industrial profits have been gaining recovery momentum since the summer, and December marked the fifth month of year-on-year increases, despite the overall figure for 2023 falling again.
Total profits at industrial enterprises with annual revenues of at least 20 million yuan (US$2.8 million) from their main operations fell by 2.3 per cent last year, the National Bureau of Statistics (NBS) confirmed on Saturday, following a 4 per cent year-on-year drop in 2022.
We believe that the US will replenish stocks in the middle of 2024, and China’s exports may benefit from that
Xie Yunliang, chief macro analyst from Cinda Securities, expects industrial profits at Chinese firms to increase by between 7 and 11 per cent this year as prices rebound and inventories in the US bottom out.