More than 500 companies listed in Shanghai and Shenzhen have released earnings guidance, revealing a concerning outlook for the Chinese economy despite positive GDP figures. Most of these companies anticipate reporting either net losses or narrower profits compared to the previous year. This contrasts sharply with the official economic data, which showed China's economy expanding by 5% in 2024, with growth picking up to 5.4% in the final quarter.
The earnings guidance from these Chinese companies suggests broad weaknesses within the corporate sector. While the official gross domestic product (GDP) data, released by the statistics department on Friday, indicates that the economy is growing at the government's targeted pace, the guidance highlights that many companies are struggling to maintain profitability. The analysis conducted by Nikkei Asia found a stark contrast between these two sets of data.
The earnings previews, released by Chinese listed companies, were made public on the same evening as the official economic growth figures. This simultaneous release underscored the disparity between the overall economic performance and individual corporate health. The government had set a specific pace for economic growth, which was met on a macro level, yet microeconomic challenges persist for numerous businesses.
China's economic growth in the final quarter of 2024 exceeded the average growth rate for the year, rising to 5.4%. This acceleration in growth provides a positive narrative for the broader economy, yet fails to alleviate the concerns raised by the earnings guidance from hundreds of companies. The analysis provided by Nikkei Asia suggests that while China is achieving its macroeconomic objectives, the corporate sector is facing significant challenges.
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