China’s Industrial Profits Continued to Shrink in December

Bloomberg  |  Author 

Published Jan 27, 2019 08:46PM ET

Updated Jan 27, 2019 09:40PM ET

China’s Industrial Profits Continued to Shrink in December

(Bloomberg) -- The profits of Chinese industrial companies fell for the second straight month as both factory inflation and economic growth slowed.

  • Manufacturing companies’ profits declined 1.9 percent last month from a year earlier

Key Insights

  • A profitable industrial sector is important to support corporate investment and make sure economic stabilization continues, according to David Qu, a Hong Kong-based China economist at Bloomberg Economics
  • China’s manufacturing companies are under pressure with output growth at the lowest pace in a decade, and factory-gate inflation slowing
  • The official year-on-year growth rate for profits began diverging from the growth rate calculated from the nominal profit figures in 2017, and continued to be higher in December’s release. That discrepancy has led some economists to question the veracity of the figures

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  • Profits climbed 10.3 percent for the full year 2018 to 6.6 trillion yuan ($980 billion), about half the pace of the previous year
  • Even though the economy is slowing, Chinese output still expanded by about the size of Australia’s gross domestic product in 2018

To contact Bloomberg News staff for this story: Yinan Zhao in Beijing at yzhao300@bloomberg.net

To contact the editors responsible for this story: Jeffrey Black at jblack25@bloomberg.net, James Mayger

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