In November, industrial firms in China lost money for the first time this year.
China’s state-owned enterprises are watching their margins shrink. Overall industrial profit growth declined and hit negative territory for the first time this year in November. Photographer: Qilai Shen/Bloomberg © 2018 Bloomberg Finance LP
Forget the pundits who are telling you that the U. S. is losing, or will lose, the trade war. Maybe both get battered, bloodied and bruised until the end. But in the meantime, the Chinese stock market and certain industries within the country are taking it on the chin. China’s industrial profit growth is non-existent.
Industrial profit growth fell to -1.8% year over year in November from a positive 3.6% in October. Although the nearly 4% growth rate is definitely a solid and not a sign of the hard landing the China bears have been predicting for the past five years, November’s negative numbers mark the seventh straight monthly decline and the lowest read-out since January 2016.
In year-to-date terms, however, China’s industrial profit growth is up 11.8% compared to 13.6% a year ago, based on data from Wind Financial, best known as the Chinese Bloomberg.
As a result of these lackluster data points, there will be «more substantial tax cuts in the quarters ahead,» says Ting Lu of Nomura Securities in Hong Kong.
Worth noting, the slowdown in industrial profit growth was mainly led by state-owned enterprises, where it slowed to 16.1% year-over-year ending November from 20.6% in October. At foreign-owned enterprises, growth moderated to 4.2% year-over-year from 5.6%. Private Chinese-owned enterprises are doing better, up modestly to 10.0% from 9.3%.
President Donald Trump in a rarely photographed happy moment during the G20 Summit in Germany of last year. (AP Photo/Evan Vucci) ASSOCIATED PRESS
«They have some tools to ease the impact of the trade war on the economy,» says Louis Lau, director of investments for Brandes in San Diego.
