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Home / Business / China's industrial gains in December shrink again due to weak demand, headwinds from trading Reuters

China's industrial gains in December shrink again due to weak demand, headwinds from trading Reuters




© Reuters. FILE PHOTO: Workers Strolling Around an Ansteel Steel Slag Processing Plant in Anshan

By Stella Qiu and Ryan Woo

BEIJING (Reuters) – Chinese industrial companies' earnings shrank in December for a second straight month due to price cuts and a decline in sales Factory activity is putting more pressure on an economy that has been in its weakest growth for nearly three decades.

The downbeat data points to further problems for the country's large manufacturing industry, which is already struggling with a decline in orders, layoffs and works closures in a fierce trade dispute with the United States.

China's economic growth fell to 6.6 percent last year, the weakest expansion in 28 years. This fears a stronger slowdown if the current US-China trade talks do not lead to further tariffs being implemented after a 90-day ceasefire. 1

9659004] Profits declined 1.9 percent year-over-year to 680.8 billion yuan (US $ 100.9 billion), impacted by weak factory gate prices and weak demand. In addition, a fall of 1.8 percent in November – the first profit decline in nearly three years.

For the full year, earnings rose 10.3 percent to 6.64 trillion yuan in 2018, down from 21 percent in 2017 from the robust pace of 2017, the National Bureau of Statistics (NBS) said Monday.

The profit for the year 2018 came mainly from the oil and mining industries as well as the iron and chemical sector, said He Ping, a bureaucrat official, along with the data release.

Activity at 2,500 Chinese small and medium-sized enterprises continued to contract in the fourth quarter of last year, despite a series of supportive state measures, according to a government planner survey in January.

The Small and Medium Business Development Index was 93 in the last quarter, below the 100th mark, which separates growth from contraction, according to the National Development and Reform Commission.

DEMAND REMAINS SOFT

Although dealers are replenishing new stock levels before New Year's New Year celebration in early February, demand remains weak.

The slowdown is exacerbated, but the government has not agreed to enforce pollution control

This increases uncertainty about the overall boost to the industrial sector through support measures that policymakers have so far pledged.

Beijing has pledged to increase spending on infrastructure projects this year and boost consumption in areas such as automobiles and home appliances.

The state-owned China Railway has reportedly set a record high in investment worth around 850 billion yuan in 2019.

China's producer prices have been rising at a slower pace than ever in over two years in December. Order intake – an indicator of future activity – declined in December for the first time in a year or more.

The profits of Chinese state-owned industrial enterprises increased by 12.6 percent in 2018 compared to the previous year, compared with an increase of 16.1 percent in the period January to November.

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