Overcapacity and weak demand hit profits at more Chinese companies
China’s industrial sector is bleeding cash as overcapacity, weak demand, and plunging profits create a financial squeeze. Nearly a quarter of Chinese A-share companies, publicly traded firms on China’s Shanghai and Shenzhen stock exchange, reported losses in Q3 2024, with profit margins at their lowest since 2009. A state-driven push to dominate key industries, like solar energy and steel, has led to price wars, forcing companies to slash costs and delay investments. With the Trump administration imposing new 10% tariffs on Chinese goods, manufacturers face even greater pressure. While Beijing has resisted sweeping stimulus, investors and analysts warn that China’s biggest challenge isn’t tariffs—it’s reigniting domestic consumption in an economy struggling under real estate woes, rising debt, and deflation.
My Take
China’s economic slowdown isn’t just about trade tensions—it’s a structural reckoning. The aggressive state-backed push into key industries has fueled a race to the bottom, where companies can’t compete on value, only on price. The real test isn’t whether China weathers U.S. tariffs, but whether it can rebalance its economy before overcapacity and debt drag it down further.
#ChinaEconomy #TradeWar #Tariffs #Manufacturing #SupplyChain #SolarIndustry #GlobalMarkets #EconomicTrends
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Credit: WSJ
This post reflects my own thoughts and analysis, whether informed by media reports, personal insights, or professional experience. While enhanced with AI assistance, it has been thoroughly reviewed and edited to ensure clarity and relevance.