China: Industrial gains increased despite weak domestic demand

Her industrial companies recorded higher in July 2024, despite persistent weak domestic demand. Specifically, the profits of China’s industrial companies increased by 4.1% in July 2024 compared to the corresponding month of 2023, after an increase of 3.6% in June, according to the Beijing statistical service. Although profits increased by 3.5% in the first half of 2024 (January – June), they increased slightly to 3.6% from January to July, according to today’s (27.8.2024) publication of Handelsblatt. The evidence gives hope for an improvement in dynamics, since the previous economic figures in August were rather ominous. However, weaker exports in July indicate problems in export-driven recovery and increase concerns about weak domestic demand. In addition, bank lending was reduced in July for the first time in 19 years. Due to weak demand, ongoing real estate crisis and employment concerns, the Beijing government plans to focus its economic stimulus measures more on consumption. Prime Minister Li Qiang announced at a cabinet meeting early in the month that he wants to boost the economy by focusing on consumption.