2024-05-01 09:34:51
Profits at Chinese industrial enterprises have begun to fall from previously reached two-year highs. At the same time, excess production capacity is complicating Beijing’s efforts to revive its slowing economy. As Day.Az reports, Financial Times writes about this.
According to the State Statistics Administration of the People’s Republic of China, in March the profits of large companies in the industrial sector decreased by 3.5% in annual terms. At the same time, in the first quarter the figure increased by 4.3% compared to the same period in 2023.
The March decline came as a surprise to the authorities after the industrial surplus jumped 10% in January-February, reaching a 25-month high and giving hope for overcoming the recession in the industrial sector.
Analysts at Goldman Sachs noted a significant drop in both profit and revenue at industrial enterprises in March, pointing to the problem of margin compression for Chinese industry.
Beijing responded by denying Washington’s position regarding excess capacity and accusing the United States of protectionism and attempts to restrain China’s development, state media reported.
Chinese authorities have set a growth target of approximately 5% for 2024 – the lowest figure in decades. However, analysts warned that with widespread deflationary pressure, this would not be easy to achieve without ramping up incentives, the newspaper notes.
“Favorable supply chain conditions, abundant inventories and excess capacity in China will help contain rising prices for industrial goods,” experts at Capital Economics noted.
The steel industry is using exports as a release valve for excess capacity, with the country approaching record steel exports recorded in 2015 despite global opposition to dumping, Westpac estimates.
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