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Update: China 2014 factory profit growth hits two-year low
[BEIJING] China's factory profits grew at their weakest rate] in two years in 2014 as its economic growth slipped to a 24-year low, underscoring the challenges the economy faces.
Profits for large Chinese industrial companies rose 3.3 per cent last year from 2013, data from the National Bureau of Statistics showed on Tuesday, the slowest rate of growth seen since November 2012.
In December alone, factory profits shrank 8 per cent, the worst performance seen in at least a year.
Mao Weiming, a vice minister at China's Ministry of Industry and Information Technology, told reporters separately that the slowdown could last some time. "As the economy enters a 'new normal', the industrial sector faces increased downward pressures, unreasonable structures, (and) weak innovation capability," Mao said as the government announced its goal of growing the sector's output by 8 per cent this year from 8.3 per cent in 2014.
Chinese leaders have been heralding a "new normal" in the maturing Chinese economy as they prepare for a transition into slower but better-quality growth.
Presaging the weak profit numbers, a private survey last week showed China's manufacturing growth stalled for the second straight month in January as firms stepped up price cutting to win new business.
Banks are also feeling the effects of the slowdown, with the bad debt ratio of Chinese banks climbing to a five-year high of 1.6 per cent at the end of 2014, China's bank regulator said last week.
Hurt by cooling investment, manufacturing and a sagging housing market, China's economy grew 7.4 per cent last year, a level not seen since 1990 when the country was hit by sanctions after the Tiananmen Square crackdown.
A Reuters poll in January showed China's economic growth was expected to slip to 7 per cent this year before dipping to 6.8 per cent next year.