 |
| Last year, Chinese companies' profits fell 4.6%, and foreign companies' profits fell 1.7% | Photo: Reuters |
China’s industrial sector profits declined 3.3% in 2024, marking the third consecutive year of losses. Additionally, the country’s Purchasing Managers’ Index (PMI) for manufacturing fell below the neutral 50-point threshold in January, signaling further economic challenges.
According to data released Monday by the National Bureau of Statistics (NBS), China’s January PMI dropped to 49.1 points, lower than the 50.1 forecast by a Reuters poll. The unexpected contraction in manufacturing activity has raised concerns about the country’s economic recovery.
Analysts attribute the PMI decline to seasonal slowdowns ahead of the Lunar New Year. Goldman Sachs chief economist Hui Shan noted that migrant workers returning home for the holiday caused disruptions in factory operations, leading to weaker purchasing activity.
Despite a three-month streak of PMI growth before January, the latest figures indicate a slowdown. China’s PMI stood at 50.1 in October, 50.3 in November, and 50.1 in December before slipping into contraction territory.
China’s blue-chip CSI 300 index initially rose on Monday but declined after the NBS report, reflecting market uncertainty over the country’s economic trajectory.
However, Bruce Pang, a senior research fellow at the National Institution for Finance and Development (NIFD), remains optimistic, stating that demand trends are still positive despite the PMI dip.
The non-manufacturing PMI, which tracks services and construction, also declined to 50.2 in January, down from 52.2 in December. The services sector PMI, however, rose to 50.3, indicating continued demand growth in areas such as public transport, hotels, food, and beverages due to the holiday season.
NBS senior statistician Zhao Qinghe noted that key raw material prices and sales showed signs of improvement, with many producers optimistic about business expansion after the Lunar New Year holiday.
China’s economic policymakers now face increasing pressure to boost financial support and stimulate industrial growth as global economic uncertainties persist.