The growth of China’s industrial profit falls as commodity prices fall

Profits rose 9.0% year-on-year in November to 805.96 billion yuan ($ 126.54 billion), up from 24.6% reported in October.

For the January-November period, industrial companies’ profits rose 38.0% year-on-year to 7.98 trillion yuan, slower than the 42.2% increase in the first 10 months of 2021, the Bureau of Statistics said.

Zhu Hong, senior statistician at NBS, said that while government efforts to cool rising wholesale prices in November took the cost pressure off the downstream industries, the sidewalks meant that the mining and raw materials sectors’ contribution to overall profit growth weakened.

“But companies are still facing significant cost pressures, and the improvement in profit for the downstream sector needs to be further consolidated,” Zhu said in a statement accompanying the data release.

China’s red-hot factory-gate inflation cooled slightly in November, fueled by a government on rising commodity prices and a declining power crisis as Beijing scrambled to reduce the crippling economic effects of rising costs.

The second largest economy in the world, which lost steam following a solid recovery from the pandemic last year, faces multiple challenges due to deepening property declines, sustained supply bottlenecks and strict COVID 19 restrictions affect consumer spending.

The need for land ownership has also hurt the steel sector, while the production of cement, glass and household appliances remains vulnerable to falling demand.

At a major agenda-setting meeting this month, China’s top leaders pledged to stabilize the economy and keep growth within a reasonable range by 2022.

The People’s Bank of China this month reduced the amount of cash banks need to keep in reserve and lowered the one-year benchmark lending rate to boost growth.

The industrial profit data cover large enterprises with annual revenues of more than 20 million yuan from their main activities.

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