Profits at China’s industrial companies grew at a slower pace in December, official data released on Thursday show, 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 ($115.9 billion), compared with a 9% gain in November.
For 2021, industrial firms’ profits rose 34% year-on-year to 8.7 trillion yuan, the National Bureau of Statistics (NBS) 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.
“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 the number of loss-making firms is still high,” Zhu said.
China’s 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 new monetary policies over the past few weeks.
It unexpectedly cut the borrowing costs of its medium-term loans for the first time since April 2020, and lowered the benchmark lending rates.
The world’s second-largest economy has been losing steam after staging a solid recovery from the pandemic and now faces multiple challenges heading into 2022.
Slowing exports, a major property sector downturn and strict Covid-19 curbs have hit consumer spending.
China’s economy grew 4% in the fourth quarter from a year earlier, marking its weakest expansion in 18 months.
- Reuters, with additional editing by George Russell