China Industrial Profits Down During Q1

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China Industrial Profits Down During Q1

China'S Industrial Profits Down By 3.5% During Q1

decline was seen in China's industrial profits for Q1 2024 when compared with the first quarter of 2023. This data from the Chinese industrial sector has now cast serious doubts about the economic recovery.

Cumulative profits during Q1 show an increase of 4.3%, with a value of $207 billion during Q1 2024. However, this is way lower than the 10.2% increase seen in the first two months.

Economic Recovery At Risk

And if we look at profits during March on a y/y basis, a decline of 3.5% was noticed. According to the NBS, the data from the Jan-Fed showed extended gains all the way back from August 2023.

At the same time, other economic indicators for the month of March were also released, such as industrial output, retail sales, and so on. All of these economic measures hint at weak domestic demand, which is a sign of worry when we look at the strong Q1 GDP growth.

It looks like the economic momentum seen during the first two months has now waned, which has also raised concerns about weak domestic demand.

According to a Chief Economist from JLL, the decline in profit will affect the repair of the liability structure and even their plans to expand.

closer look at the data shows that the high-tech manufacturing sector recorded the most growth, with a 29.1% jump in profits. The NBS also added that the recovery seen in the Chinese firms is very uneven.

The automobile manufacturing sector, which is also a major part of the Chinese economy, showed a 32% jump in profits during Q1 (Jan - Mar.)

Amidst all of these economic releases, Fitch has lowered China's credit rating to negative, which means the economy is facing uncertainty and headwinds in multiple directions.

According to experts, an improvement will be seen in the manufacturing sector due to policies involving the renewal of large-scale equipment.

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