Profits of Chinese industry showed record drop in December

BOFIT Viikkokatsaus / BOFIT Weekly Review 2015/05

Profits of large industrial firms fell 8 % y-o-y in December. On-year profit margins have been shrinking since October. While profits still rose for the year whole, profit growth in 2014 amounted to only about 3 %, down from about 12 % in 2013.

While declines in prices of oil and other commodities helped boost the profit margins of some Chinese producers, prices of the end products of many industrial firms have fallen sharply. Thus, the overall impact of lower commodity prices has been negative for many industries. Profitability also varies considerably across sectors. Hardest hit have been producers of basic commodities (e.g. mining, as well as oil and fuel production). At the same time, producers in such branches as machine-building and automobile manufacture, along with companies generating electric power and heating, have seen profits rise on lower input prices.

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