Profit growth of China's major industrial enterprises slowed to 9 percent in November, down 15.6 percentage points from October, amid lingering cost pressure on firms and COVID-19 flare-ups.
However, industrial profits grew 38 percent year-on-year in the first 11 months and 18.9 percent on average over the past two years, the National Bureau of Statistics (NBS) said on Monday. In November, industrial profits stood at 805.96 billion yuan ($126.54 billion).
Zhu Hong, a senior statistician from the NBS, said that profits of industrial enterprises continued to grow, but cost pressures remained high, and the improvement in profits for downstream companies needs to be further consolidated.
"The deceleration was caused by recent COVID-19 flare-ups, the decline of some raw material prices and shrinking demand," Cong Yi, a professor from the Tianjin University of Finance and Economics, told the Global Times on Monday.
Cong added that the cooling of the property market also affected industrial profits, as the trend curbed demand for steel, glass, interior decorating materials and other sectors.
Experts noted that despite the slowdown, production and operating conditions of the industrial sector continued to improve.
According to the NBS, from January to November, profits of major industrial companies hit 7.975 trillion yuan.
Zhu said that with more stimulus measures, including ensuring supply, stabilizing prices, and helping enterprises overcome challenges, the rapid rise in raw material prices was curbed, and the profit structure showed improvement.
Profits of mining firms eased and coal prices fell significantly from the previous month, as the country moved to curb market speculation and ensure stable supply, the data showed.
Though the weakened contribution from the mining and raw material sectors to overall profit growth, the contribution of equipment and consumer goods manufacturing increased, the senior statistician said.
Consumer goods manufacturers' profits rose 13.6 percent year-on-year in November, up 10.0 percentage points from October, and the second increase in many months. The improvement was driven by the steady recovery of production and a rebound in prices.
Zhu said that the government will increase targeted support for manufacturers, especially small and medium-sized companies, in a bid to improve market conditions, maintain supply and price stability, and promote the sound and stable operation of the economy.
Cong said that guided by the tone-setting Central Economic Work Conference, industrial profits next year will be boosted by the development of the real economy, including small businesses.
With the implementation of a 50 basis-point universal cut in the reserve requirement ratio for financial institutions and the increase of local debt issuance to support infrastructure construction, China's demand will expand rapidly, Cong said.
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