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Summary
A double-digit decline in profits of China's big industrial firms reported by its National Statistics Bureau points to weak domestic demand. Beijing’s renewed export thrust may have set back its plan to focus on local consumption.
Fresh economic data adds to evidence of China’s economy weakening.
On Saturday, data issued by its National Bureau of Statistics showed profits for big Chinese industrial firms (with annual sales of above 20 million yuan or $2.9 million) slumped 13.1% from a year earlier in November, worse than the 5.5% fall in October.
It’s yet another sign that all isn’t well in China’s economy.
Although its exports have held up despite the US tariff onslaught, its domestic markets are caught in a deflationary grip, baring weak consumption that Beijing has been struggling to reverse with fiscal measures.
It reflects a failure to reorient its economy away from exports and towards the use of local demand as a growth engine.
While that project may seem like lower priority than erecting defences against American trade aggression, neglecting its “internal circulation” would be a folly.
Its export dominance is clear and it has weaponized its hold on the global rare-earth supply chain.
Yet, its impressive performance on the world stage will not help it escape a middle-income trap if people in the People’s Republic are served poorly.
China faces a big policy challenge and how it tackles it may affect the rest of the world.
English (US) ·