China’s industrial profits fell the most in two years last month, the latest data to show a deepening slowdown in the world’s second-biggest economy as pressure grows on the nation’s central bank to ease monetary conditions.
Total profits of China’s industrial enterprises in November dropped 4.2 percent from a year earlier, the National Bureau of Statistics said today in Beijing. That followed October’s 2.1 percent decline and a 0.4 percent increase in September. It’s the biggest slide since August 2012, when profits slumped 6.2 percent.
Mired in industrial overcapacity, factory-gate deflation and a housing slump, China is headed for its slowest full-year economic expansion since 1990. A Chinese factory index fell to a seven-month low in December, while growth in aggregate financing, the broadest gauge of credit, trailed estimates in November, and imports unexpectedly dropped amid weak demand.
China’s benchmark Shanghai Composite Index rallied 2.8 percent yesterday -- extending a two-day gain to 6.2 percent, the strongest in five years -- amid speculation the government will further ease monetary policy to support the economy after cutting interest rates last month.
The People’s Bank of China may start including in calculations of loan-to-deposit ratios any cash banks hold for non-deposit-taking financial institutions, Reuters reported yesterday, citing unidentified people. The report comes after people with knowledge of the matter said earlier this week that lenders won’t be required to set aside reserves for such holdings.
The measures are seen as another move to replace a universal reserve-requirement ratio cut that the PBOC needs to boost credit and bolster the economy. Concerned that a broad reduction might send out a strong easing signal and bring turmoil to stock markets, the central bank has added liquidity by stealth at least four times in the past four months.
For the first 11 months of the year, profits at industrial companies rose 5.3 percent from year-earlier levels, today’s NBS data showed.
To contact Bloomberg News staff for this story: Tian Ying in Beijing at ytian@bloomberg.net
To contact the editors responsible for this story: Stanley James at sjames8@bloomberg.net Allen Wan, Jim McDonald
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