China’s industrial profits fell at their fastest pace in more than a year in November, highlighting the mounting pressure on policymakers as they grapple with overcapacity, weak consumer confidence and slowing domestic demand.
Profits at industrial firms with annual revenues above 20 million yuan fell 13.1 percent from a year earlier, according to data released Saturday by the National Bureau of Statistics. The drop marked a sharp deterioration from October’s 5.5 percent decline and dragged year-to-date profit growth down to just 0.1 percent, compared with 1.9 percent growth in the January-to-October period.
The setback underscores the difficulty China faces in restoring durable momentum after the collapse of its debt-driven property sector, now in its fifth year of crisis. While exports of low-cost manufactured goods have helped support headline growth, the broader economy remains weighed down by deflationary pressures, weak household spending and falling investment. Producer prices have been in negative territory for three consecutive years.
The latest figures point to the challenge of reviving confidence among companies and consumers even as tensions with the United States have eased and high-tech exports have surged. Yu Weining, chief statistician at the NBS, said the economy was under “structural adjustment pressures” as it shifts from old growth engines to new ones, warning that the global environment remains unstable and uncertain.
Beijing has resisted repeated calls from economists to roll out large-scale stimulus or undertake sweeping social security reforms to boost household sentiment. Instead, authorities have increasingly focused on curbing what they describe as neijuan, or involution, referring to excessive competition that has fueled overproduction, brutal price wars and falling prices across industrial sectors.
President Xi Jinping has in recent weeks urged officials to move more decisively to address weak domestic demand. Writing in Qiushi, the Communist Party’s flagship journal, Xi said expanding domestic demand was a strategic necessity tied to both economic stability and security, rather than a short-term policy fix. He has also reiterated calls for greater discipline in investment decisions, following criticism of industrial overinvestment and unfair treatment of suppliers.
Other recent data have reinforced the downbeat picture. Fixed asset investment fell 2.6 percent in the January-to-November period from a year earlier, while retail sales rose just 1.3 percent in November, the slowest pace since December 2022 and below market expectations.
Despite the broader slowdown, some manufacturing sectors showed resilience. High-tech manufacturing recorded year-on-year growth of 10 percent, while the auto industry posted a 7.5 percent increase, offering limited bright spots as China searches for new drivers of growth.
