China’s Industrial Profit Decline Eases in November, But 2024 Could See Worst Annual Drop in Decades

China’s industrial sector showed signs of stabilization in November, with profits falling 7.3% year-on-year, improving from a 10% drop in October. However, analysts warn that 2024 may mark the steepest annual profit decline since at least 2000, amid weak consumption, housing woes, and global trade headwinds.

Profit Trends: Better Month, Still a Weak Year

• November YoY profit decline: -7.3% (vs. -10% in October)

• Producer Prices (PPI) contracted at a slower pace: -2.5% vs. -2.9%

• Jan–Nov cumulative profits fell 4.7%, worse than the previous 4.3% drop

Ongoing Economic Challenges

• Domestic demand remains soft, limiting recovery

• Real estate market stays fragile, with home prices declining for 17 straight months

• Rising geopolitical risks, especially under a potential new Trump administration, could further strain trade

Policy Response: Fiscal Stimulus Kicks In

To counter the headwinds, Chinese policymakers have pledged:

• A record $411 billion in special government bonds for 2025

• More direct subsidies for households and SMEs

• A combination of larger fiscal deficits and looser monetary policy

Despite stronger industrial output in November, full-scale recovery remains elusive.

Profit Breakdown by Ownership (Jan–Nov):

Outlook: A Long Road to Recovery

While the World Bank upgraded China’s 2024 growth forecast to 4.9%, realizing that target will require coordinated progress in consumer confidence, property stabilization, and external trade.