China’s industrial profit growth slumps as commodity prices fall

Profits rose 9.0% year-on-year in November to 805.96 billion yuan ($126.54 billion), well above the 24.6% gain recorded in October.

For the January-November period, industrial enterprise profits rose 38.0 percent year on year to 7.98 trillion yuan, slower than the 42.2 percent rise in the first 10 months of 2021, it said. said the statistics office.

Zhu Hong, senior statistician at the NBS, said while the state’s efforts to cool November’s wholesale price spike had eased cost pressures from downstream industries, the restrictions meant that the contribution from the mining and commodities to overall earnings growth had weakened.

“But companies still face strong cost pressures, and the improvement in downstream industry profits needs to be further consolidated,” Zhu said in a statement accompanying the data release.

China’s factory gate inflation cooled slightly in November, spurred by a government crackdown on runaway commodity prices and an easing power crisis as Beijing was scrambling to blunt the crippling economic effects of soaring costs.

The world’s second-largest economy, which faltered after a strong post-pandemic recovery last year, faces multiple challenges as the housing downturn deepens, supply bottlenecks persist and strict COVID-19 restrictions are hitting consumer spending.

The country’s real estate crisis has also hurt the steel sector, while production of cement, glass and household appliances remain vulnerable to falling demand.

At a key meeting on the agenda this month, China’s top leaders pledged to stabilize the economy and keep growth within a reasonable range in 2022.

The People’s Bank of China this month cut the amount of cash banks must hold in reserve and lowered the benchmark one-year lending rate to spur growth.

The industrial profit data covers large enterprises with annual sales exceeding 20 million yuan through their core businesses.