Profits at China’s industrial companies fell 2.3 per cent in 2023, their second straight yearly decline, due to sluggish demand at home and abroad, adding pressure on economic growth amid a deep property slump and deflationary risks.

The drop followed a 4.4 per cent profit fall in the first 11 months from the same period a year earlier, according to data from the National Bureau of Statistics on Saturday (Jan 27).

But there were some signs of improvement at the end of the year. For December alone, industrial profits rose 16.8 per cent from a year earlier, down from a 29.5 per cent jump in November and extending gains for a fifth month.

Profits fell 4 per cent in 2022 due to strict Covid-19 curbs.

China’s economy expanded by 5.2 per cent in 2023, but its post-pandemic recovery has been shaky, with a protracted housing downturn, mounting deflationary risks, and slowing global growth casting clouds over the outlook for this year.

China’s central bank announced on Wednesday that it was making a 50 basis point cut to bank reserves, the biggest in two years, sending a strong signal of support for a fragile economy and the country’s plunging stock markets.

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Still, analysts say more stimulus is needed this year to get economic activity on more solid footing.

Industrial profit numbers cover companies with annual revenues of at least 20 million yuan (S$3.8 million) from their main operations. REUTERS