A look at China's Industrial Profits and their context within the wider economy

CGTN Europe spoke to Chen Jiahe, CIO at Novem Arcae Technologies.

Transcript

00:00Industrial profit data is a key indicator of the financial health of factories, utilities and mines.

00:07In November, it was down 7.3% compared with the previous year.

00:13But that was better than the 10% drop that was recorded in October.

00:18And a major bounce back from the 27.1% plunge in September.

00:23Let's get more on this with Chen Jiahe, Chief Investment Officer at Novem RK Technologies.

00:53That applies the same thing for China's industry. If you look into the history

00:57of this industrial profit annual growth rate, you can see that there has been a few drawbacks

01:03in its own history. You see this data sometimes fall into a negative territory.

01:07But later on with the growing of the economy actually comes back.

01:12Yeah. And I mean, there are a few bright spots, aren't there? There are notable growth areas,

01:16for example, electricity and heat production. They're around 13.5% growth and textiles at 4.6%

01:25growth. Yeah, definitely. You see all these

01:28kind of subsectors that are having the increasing with the profits like the sectors that you have

01:33just mentioned. Also, some other sectors, you know, for example, it might not belong to the

01:39industrial chain, but look at other parts of the Chinese economy. The port companies are actually

01:44growing. The trading data of China increased about 7% this year. Also, if you look at

01:49telecommunication companies, they are increasing as well. And also, if you look at many things,

01:54especially the new energy vehicles, you've got a very sharp rising with the selling of new energy

01:58vehicles, especially the electrical vehicles, these kind of things. Don't even mention the

02:03online consumption, which has been growing at about 10% or 11%, I think.

02:07So, what policies do you think will be introduced to stimulate China's industrial sector?

02:14Well, to stimulate China's industrial sector, we have seen many policies given out. I mean,

02:19China's government is a very responsible government. They give out a huge amount of

02:23economic policy every year. I mean, if you read through the paper, I mean, for industries,

02:27for example, cutting the taxation for industrial companies is definitely one of them. The

02:33government also gives financial loans and subsidies to industries, especially those

02:38high-tech industries, which is very beneficial to China's economic growth in the future. Also,

02:43China has been trying to stimulate the property market as the price has been falling by about

02:48three or four years. So, it's time to stabilize this market right now. So, it's quite a lot of

02:52policies given to the property market. Also, China's introducing a lot of foreign investments.

02:57So, just finally then, the outlook for 2025, do you think it's a positive one in terms of

03:03industry and China's economy in general? Yes, I think that will be better than

03:10this year because when we look at the most important factor is the property sector is

03:15that it's starting to stabilize right now because of so many policies given by the government. It

03:21looks like the effect will at least continue into the first quarter or the first half of next year.

03:27And the growth rate of consumption is picking up. We also see the international trade is coming up

03:32as well. And the government, one of the very important things is that the government is

03:36setting out a huge plan to stimulate the economy next year.