China’s industrial profits fell by 3.3% in 2024, marking the third straight year of contraction, as reported by the National Bureau of Statistics (NBS). The prolonged slump in industrial profits reflects ongoing challenges, including weak domestic demand, geopolitical uncertainties, and the ripple effects of deflationary pressures.
The NBS report highlighted that private firms and small-to-medium enterprises (SMEs) were particularly impacted by lower consumer spending and high operational costs. Key sectors like manufacturing and mining saw notable declines in profitability, while state-owned enterprises showed relative resilience due to government-backed support measures. Analysts pointed to sluggish global demand for Chinese exports as another significant factor behind the downturn.
The downturn in industrial profits underscores the fragile recovery of the Chinese economy, which has been grappling with the lingering effects of the COVID-19 pandemic and domestic policy adjustments. Efforts to boost consumption, such as tax incentives and infrastructure investments, have yet to yield substantial improvements. Economists suggest that Beijing may need to recalibrate its policies to stabilise the industrial sector and restore investor confidence.
Contradictory View from Global Times
However, Global Times, a daily under the auspices of the Chinese Communist Party’s flagship newspaper, the People’s Daily, presented a different perspective. Its report argued that while profits declined in 2024, sectors like renewable energy, high-tech manufacturing, and green industries showed robust growth. It also emphasised that government stimulus measures, including tax cuts and infrastructure spending, have laid a solid foundation for economic recovery in 2025. The publication downplayed the severity of deflationary pressures and suggested the industrial slowdown was part of an inevitable restructuring process aimed at transitioning to a more sustainable economic model.
