BEIJING (Reuters) – Profits at China’s industrial firms grew at a slower pace in December, the statistics bureau said on Thursday, as factory-gate inflation continued to ease, pointing to cooling demand amid mounting economic challenges.
Profits rose 4.2% year-on-year, the slowest rate since April 2020, to 734.2 billion yuan ($115.89 billion), compared with a 9% gain in November.
For 2021, industrial firms’ profits rose by a whopping 34.3% year-on-year to 8.7 trillion yuan, the National Bureau of Statistics said.
“In 2021, the profits of industrial enterprises achieved relatively fast growth, with corporate efficiency steadily improving,” Zhu Hong, a senior NBS statistician, said in a statement.
“However, we must acknowledge that growth rates dropped significantly in November and December and that downstream firms, especially small firms, still face relatively big operational pressures and that the number of loss-making firms is still high,” Zhu said.
China’s red-hot factory-gate inflation cooled for the second straight month in December, driven by a government crackdown on runaway commodity prices as Beijing scrambled to lessen the crippling economic effects of surging costs.
To stabilise a faltering economy, the People’s Bank of China has rolled out a slew of monetary policies in past weeks. It unexpectedly cut the borrowing costs of its medium-term loans for the first time since April 2020, and lower the benchmark lending rates.
The world’s second-largest economy, which is losing steam after staging an solid recovery from the pandemic, faces multiple challenges heading into 2022, due to slowing exports, a property downturn and strict COVID-19 curbs that have hit consumer spending.
China’s economy grew 4.0% in the fourth quarter from a year earlier, marking its weakest expansion in one-and-a-half years.
The industrial profit data covers large firms with annual revenue of over 20 million yuan from their main operations.
($1 = 6.3354 Chinese yuan)
(Reporting by Albee Zhang, Stella Qiu and Ryan Woo; Editing by Edwina Gibbs)
