Profits at large Chinese industrial companies declined last year, reflecting widespread corporate pain stemming from falling prices and weak demand both at home and overseas.
Industrial profits at large-scale Chinese companies decreased 2.3 percent last year from 2022, data published by China’s National Bureau of Statistics (NBS) on Saturday show.
That annual number contrasted with an end-of-year surge, after last month’s profits soared 16.8 percent from the same month in 2022. That was a slower pace than November’s 29.5 percent increase. Both months reflected a rebound in output from a year earlier, when nationwide COVID-19 outbreaks shuttered factories in many major cities.
Photo: AFP
“Overall, industrial profits maintained the recovery momentum in 2023,” the NBS said in a statement, noting the annual decline narrowed from 2022 as monthly profits resumed growth since August last year.
China would seek to “expand domestic demand, lift market confidence, invigorate various industry participants,” and try to sustain and boost the recovery, it said.
While China hit its conservative target of about 5 percent growth last year, an expected post-pandemic boom failed to materialize as a property market slump dragged on the world’s second-largest economy. That has spurred Beijing to ramp up measures to aid growth without flooding the system with so-called “big stimulus.”
Industrial profits have been improving since last summer, a sign many companies are approaching the end of a destocking cycle. In another positive sign, industrial output expanded 6.8 percent last month, the fastest pace since 2021. A year-on-year decline in producer prices also slowed from November last year, reducing the hit to profitability.
Total industrial profits are determined by changes in output, prices and profit margins. Industrial producers increased their margins over the course of last year, official data showed, as they cut costs per unit of revenue.
Signs of deflation have become more prevalent across China, casting doubt on whether the surge in industrial profits can be sustained.
Authorities still face pressure to keep the stimulus coming. Economists are expecting further cuts to the reserve requirement ratio — which determines the amount of cash banks must keep in reserve — over the rest of the year, in addition to modest policy-rate reductions.
The People’s Bank of China on Wednesday last week announced that it would cut the reserve requirement ratio by 0.5 percentage points on Monday next week to provide 1 trillion yuan (US$140.91 billion) in long-term liquidity to the market. The central bank has signaled more targeted stimulus to guide money toward specific sectors of the economy.
Napoleon Osorio is proud of being the first taxi driver to have accepted payment in bitcoin in the first country in the world to make the cryptocurrency legal tender: El Salvador. He credits Salvadoran President Nayib Bukele’s decision to bank on bitcoin three years ago with changing his life. “Before I was unemployed... And now I have my own business,” said the 39-year-old businessman, who uses an app to charge for rides in bitcoin and now runs his own car rental company. Three years ago the leader of the Central American nation took a huge gamble when he put bitcoin
TECH RACE: The Chinese firm showed off its new Mate XT hours after the latest iPhone launch, but its price tag and limited supply could be drawbacks China’s Huawei Technologies Co (華為) yesterday unveiled the world’s first tri-foldable phone, as it seeks to expand its lead in the world’s biggest smartphone market and steal the spotlight from Apple Inc hours after it debuted a new iPhone. The Chinese tech giant showed off its new Mate XT, which users can fold three ways like an accordion screen door, during a launch ceremony in Shenzhen. The Mate XT comes in red and black and has a 10.2-inch display screen. At 3.6mm thick, it is the world’s slimmest foldable smartphone, Huawei said. The company’s Web site showed that it has garnered more than
Vanguard International Semiconductor Corp (世界先進) and Episil Technologies Inc (漢磊) yesterday announced plans to jointly build an 8-inch fab to produce silicon carbide (SiC) chips through an equity acquisition deal. SiC chips offer higher efficiency and lower energy loss than pure silicon chips, and they are able to operate at higher temperatures. They have become crucial to the development of electric vehicles, artificial intelligence data centers, green energy storage and industrial devices. Vanguard, a contract chipmaker focused on making power management chips and driver ICs for displays, is to acquire a 13 percent stake in Episil for NT$2.48 billion (US$77.1 million).
CROSS-STRAIT TENSIONS: The US company could switch orders from TSMC to alternative suppliers, but that would lower chip quality, CEO Jensen Huang said Nvidia Corp CEO Jensen Huang (黃仁勳), whose products have become the hottest commodity in the technology world, on Wednesday said that the scramble for a limited amount of supply has frustrated some customers and raised tensions. “The demand on it is so great, and everyone wants to be first and everyone wants to be most,” he told the audience at a Goldman Sachs Group Inc technology conference in San Francisco. “We probably have more emotional customers today. Deservedly so. It’s tense. We’re trying to do the best we can.” Huang’s company is experiencing strong demand for its latest generation of chips, called
RSS