OCTOBER 27TH 2015
WHEN CHINA SNEEZES, DEVELOPING ECONOMIES CATCH THE FLU.
Industrial profits fell on September by 0.1 per cent, compared to the previous year. This represents a small recovery from the big 8.8 per cent plunge in August 2015.
According to the National Bureau of Statistics (NBS), profits earned by Chinese industrial companies fell just 1.7 per cent in the first nine months of the year vis-a-vis same period last year. These are companies with annual revenue higher than 20 million yuan, representing key areas of the country’s economy.
The NBS is not optimistic about the prospects of the industrial sector, as they cannot foresee green numbers in the near future.
China’s government policies have managed to successfully control their economy’s soft-landing and transition structural transition. Just last week, the People’s Bank of China (PBOC) announced cuts on key interest rates and eased bank requirements. Moreover, as previously informed by Annex Asia, third quarter GDP was higher than expected, 6.9 per cent, though still the lowest growth in decades.
The rollercoaster of China’s economy will continue to fluctuate. Big industrial companies have seen huge losses in the process. This is part of a structural transition that will allow the country to stabilise its accumulation pattern for the long-run. It is evident that these downturns will affect rentier economies dependent on Chinese investments, such as those in Africa and part of Latin America and the Caribbean. This must be seen as an opportunity for local businesses to expand their investments in different areas, and for governments to finally overcome the historic pattern of commodities export.
Annex Asia Publishing
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Image: wikipedia (China)
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