Editorial | Industrial profits slide highlights China’s need for balanced economy
Amid mixed signals on the health of the economy, President Xi Jinping calls on top officials to keep China on track to meet annual growth target of about 5 per cent
The Standing Committee of the National People’s Congress will convene next week amid anticipation of major economic policy adjustments to boost growth. The legislative meeting is timed to coincide with the United States presidential election and an expected benchmark interest rate cut by the US Federal Reserve.
Lawmakers will factor the outcomes into their deliberations, along with first reports of the effect on consumer confidence of a spurt of stimulatory measures over the past month. Meanwhile, the 5 per cent growth target for this year remains paramount, following 4.6 per cent growth in the third quarter, with President Xi Jinping having rallied a meeting of top officials to keep the country on track to achieve it.
Mixed early signals and anecdotal evidence following recent stimulatory measures are to be expected. However, one that stands out is news of a 27.1 per cent slump in the profits of major industrial firms in September, year on year, following an 18 per cent fall in August.
This reflects lack of demand and overproduction.
To put that into a wider context, China’s share of global production is more than 30 per cent, while its share of the global economy is about 18 per cent, roughly in line with its share of global population. That reflects dependence on the production side.
