Profits at large Chinese industrial companies declined last year, reflecting widespread corporate pain stemming from falling prices and weak demand both at home and overseas.
Industrial profits at large-scale Chinese companies decreased 2.3 percent last year from 2022, data published by China’s National Bureau of Statistics (NBS) on Saturday show.
That annual number contrasted with an end-of-year surge, after last month’s profits soared 16.8 percent from the same month in 2022. That was a slower pace than November’s 29.5 percent increase. Both months reflected a rebound in output from a year earlier, when nationwide COVID-19 outbreaks shuttered factories in many major cities.
Photo: AFP
“Overall, industrial profits maintained the recovery momentum in 2023,” the NBS said in a statement, noting the annual decline narrowed from 2022 as monthly profits resumed growth since August last year.
China would seek to “expand domestic demand, lift market confidence, invigorate various industry participants,” and try to sustain and boost the recovery, it said.
While China hit its conservative target of about 5 percent growth last year, an expected post-pandemic boom failed to materialize as a property market slump dragged on the world’s second-largest economy. That has spurred Beijing to ramp up measures to aid growth without flooding the system with so-called “big stimulus.”
Industrial profits have been improving since last summer, a sign many companies are approaching the end of a destocking cycle. In another positive sign, industrial output expanded 6.8 percent last month, the fastest pace since 2021. A year-on-year decline in producer prices also slowed from November last year, reducing the hit to profitability.
Total industrial profits are determined by changes in output, prices and profit margins. Industrial producers increased their margins over the course of last year, official data showed, as they cut costs per unit of revenue.
Signs of deflation have become more prevalent across China, casting doubt on whether the surge in industrial profits can be sustained.
Authorities still face pressure to keep the stimulus coming. Economists are expecting further cuts to the reserve requirement ratio — which determines the amount of cash banks must keep in reserve — over the rest of the year, in addition to modest policy-rate reductions.
The People’s Bank of China on Wednesday last week announced that it would cut the reserve requirement ratio by 0.5 percentage points on Monday next week to provide 1 trillion yuan (US$140.91 billion) in long-term liquidity to the market. The central bank has signaled more targeted stimulus to guide money toward specific sectors of the economy.
Nvidia Corp’s demand for advanced packaging from Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) remains strong though the kind of technology it needs is changing, Nvidia CEO Jensen Huang (黃仁勳) said yesterday, after he was asked whether the company was cutting orders. Nvidia’s most advanced artificial intelligence (AI) chip, Blackwell, consists of multiple chips glued together using a complex chip-on-wafer-on-substrate (CoWoS) advanced packaging technology offered by TSMC, Nvidia’s main contract chipmaker. “As we move into Blackwell, we will use largely CoWoS-L. Of course, we’re still manufacturing Hopper, and Hopper will use CowoS-S. We will also transition the CoWoS-S capacity to CoWos-L,” Huang said
Nvidia Corp CEO Jensen Huang (黃仁勳) is expected to miss the inauguration of US president-elect Donald Trump on Monday, bucking a trend among high-profile US technology leaders. Huang is visiting East Asia this week, as he typically does around the time of the Lunar New Year, a person familiar with the situation said. He has never previously attended a US presidential inauguration, said the person, who asked not to be identified, because the plans have not been announced. That makes Nvidia an exception among the most valuable technology companies, most of which are sending cofounders or CEOs to the event. That includes
INDUSTRY LEADER: TSMC aims to continue outperforming the industry’s growth and makes 2025 another strong growth year, chairman and CEO C.C. Wei says Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), a major chip supplier to Nvidia Corp and Apple Inc, yesterday said it aims to grow revenue by about 25 percent this year, driven by robust demand for artificial intelligence (AI) chips. That means TSMC would continue to outpace the foundry industry’s 10 percent annual growth this year based on the chipmaker’s estimate. The chipmaker expects revenue from AI-related chips to double this year, extending a three-fold increase last year. The growth would quicken over the next five years at a compound annual growth rate of 45 percent, fueled by strong demand for the high-performance computing
TARIFF TRADE-OFF: Machinery exports to China dropped after Beijing ended its tariff reductions in June, while potential new tariffs fueled ‘front-loaded’ orders to the US The nation’s machinery exports to the US amounted to US$7.19 billion last year, surpassing the US$6.86 billion to China to become the largest export destination for the local machinery industry, the Taiwan Association of Machinery Industry (TAMI, 台灣機械公會) said in a report on Jan. 10. It came as some manufacturers brought forward or “front-loaded” US-bound shipments as required by customers ahead of potential tariffs imposed by the new US administration, the association said. During his campaign, US president-elect Donald Trump threatened tariffs of as high as 60 percent on Chinese goods and 10 percent to 20 percent on imports from other countries.
RSS