China's industrial profits shrank for a second straight month in December, putting pressure on policymakers to support industries hurt by slowing prices and weak factory activity amid a protracted US-Sino trade war.
The downbeat data points to more troubles ahead for the country’s vast manufacturing sector already struggling with a decline in orders, job layoffs and factory closures as China’s economic growth slows to its weakest in nearly three decades, reports Reuters.
China’s economy expanded 6.6 per cent in 2018 and growth is set to slow further this year as Beijing’s efforts to reduce debt risks depress the property market and curb credit flows to the private sector.
Industrial profits in December fell 1.9 per cent from a year earlier to 680.8 billion yuan ($100.9 billion), weighed down by weak factory-gate prices and soft demand, according to government data.
This is on top of a decline of 1.8 per cent in November - the first contraction in profits in nearly three years.
Profits at chemical, coal mining and non-ferrous metal sectors all slowed significantly in December, the National Bureau of Statistics (NBS) said on Monday.
For the full year, profits rose 10.3 per cent to 6.64 trillion yuan in 2018, easing from 2017’s robust pace of 21 per cent.
Monday’s data showed industrial firms’ liabilities rose 5.2 per cent from a year earlier to 64.1 trillion yuan by end-2018, compared with a 5.8 per cent rise as of end-November.
The state-run enterprise China Railway is planning a record-high rail investment worth about 850 billion yuan in 2019, according to a Nikkei report.
China’s producer prices rose at their slowest pace in more than two years in December. New orders - an indicator of future activity - contracted for the first time in at least a year in December.
Profits at China’s state-owned industrial firms rose 12.6 per cent in 2018 from a year earlier, slowing from a 16.1 per cent increase in the January-November period.