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Iris Pang, economist at ING, notes that Chinese industrial profits grew by 5.4% year on year in November after a contraction of 9.9%YoY in October, marking the fastest growth in 2019 except in March.

Key Quotes

“In terms of the growth rate of profits, ferrous metal mining had a 170.7%YoY year-to-date increase in profits in November.”

“From another perspective, if we rank the operating profits of the reported manufacturing industries, the biggest operating profit industry, which is the computer, telecommunication, and electronic equipment industry, earned a profit of CNY 10.2 trillion YTD in November that grew by 4.1%YoY year-to-date.”

“The trade war continued to damage export-related manufacturing activities. As long as the ‘phase-one’ deal is not signed, the tariffs imposed on China’s export to the US will not be rolled back. But, even if the ‘phase – one’ deal is signed, the rollback of tariffs, according to the media, will be just 7.5% on $120 billion goods, which is too small to stop damages on overall Chinese exports.”

“Because of the two growth engines in 2020 – infrastructure projects and 5G – industrial profits are expected to enjoy positive growth in 2020.”