Profits at China’s industrial firms fell at the sharpest pace since April last year, dragged down by weaker manufacturing as part of an economic slowdown that is now prompting extraordinary stimulus efforts.
Industrial profits at large Chinese companies decreased 17.8 percent on an annual basis last month, after a 4.1 percent gain in July, the Chinese National Bureau of Statistics (NBS) said in a statement yesterday.
Earnings growth grew 0.5 percent to 4.65 trillion yuan (US$663 billion) in the first eight months compared with the same period last year.
Photo:AFP
Bloomberg Economics had forecast a deceleration to 3.6 percent last month, but expected growth to stay steady in the January-to-August period relative to the first seven months of the year. The figures are a key gauge of measuring the financial health of factories, mines and utilities that can affect their investment decisions in the months to come.
The NBS blamed last month’s slowdown — the first drop in five months — on a lack of market demand, the effect of high temperature and floods in some areas, as well as a high base of comparison.
“Domestic consumer demand is still weak, the external environment is complex and changeable, and the foundation for the recovery of industrial profit still needs to continue to consolidate,” NBS statistician Yu Weining (于衛寧) said in a statement accompanying the release.
The latest reading came against the backdrop of a slower-than-expected increase in industrial output last month, when it extended a weakening streak to the longest in almost three years.
The slowdown became more apparent during a weak earnings season that showed little sign of any imminent recovery in consumption.
Thinner profit margins reflect the frailty of the broader Chinese economy in the absence of stronger domestic demand. Underscoring the drag on earnings, producer prices have been falling since late 2022, intensifying fears that deflation was becoming entrenched in China.
With signs mounting that the world’s second-largest economy risked missing Beijing’s goal of growing about 5 percent, the government pivoted this week and unveiled a broad package of stimulus measures to revive growth.
The country’s top leadership also used its monthly huddle to call for stronger fiscal support and other steps that signaled a growing urgency to arrest the slowdown.
ENERGY ISSUES: The TSIA urged the government to increase natural gas and helium reserves to reduce the impact of the Middle East war on semiconductor supply stability Chip testing and packaging service provider ASE Technology Holding Co (日月光投控) yesterday said it planned to invest more than NT$100 billion (US$3.15 billion) in building a new advanced chip testing facility in Kaohsiung to keep up with customer demand driven by the artificial intelligence (AI) boom. That would be included in the company’s capital expenditure budget next year, ASE said. There is also room to raise this year’s capital spending budget from a record-high US$7 billion estimated three months ago, it added. ASE would have six factories under construction this year, another record-breaking number, ASE chief operating officer Tien Wu
The EU and US are nearing an agreement to coordinate on producing and securing critical minerals, part of a push to break reliance on Chinese supplies. The potential deal would create incentives, such as minimum prices, that could advantage non-Chinese suppliers, according to a draft of an “action plan” seen by Bloomberg. The EU and US would also cooperate on standards, investments and joint projects, as well as coordinate on any supply disruptions by countries like China. The two sides are additionally seeking other “like-minded partners” to join a multicountry accord to help create these new critical mineral supply chains, which feed into
For weeks now, the global tech industry has been waiting for a major artificial intelligence (AI) launch from DeepSeek (深度求索), seen as a benchmark for China’s progress in the fast-moving field. More than a year has passed since the start-up put Chinese AI on the map in early last year with a low-cost chatbot that performed at a similar level to US rivals. However, despite reports and rumors about its imminent release, DeepSeek’s next-generation “V4” model is nowhere in sight. Speculation is also swirling over the geopolitical implications of which computer chips were chosen to train and power the new
Intel Corp is joining Elon Musk’s long-shot effort to develop semiconductors for Tesla Inc, Space Exploration Technologies Corp and xAI, marking a surprising twist in the chipmaker’s comeback bid. Intel would help the Terafab project “refactor” the technology in a chip factory, the company said on Tuesday in a post on X, Musk’s social media platform. That is a stage in the development process that typically helps make chips more powerful or reliable. The chipmaker’s shares jumped 4.2 percent to US$52.91 in New York trading on Tuesday. The Terafab project is a grand plan by Musk to eventually manufacture his own chips for
RSS