Photo: Xinhua

China's industrial profit slipped 3.3 percent year-on-year to 6.20 trillion yuan ($893.69 billion) in 2019, as the nation was contending with economic downward pressure originating from a bruising trade war with the US and ongoing industrial upgrade. 

Due to the outbreak of coronavirus, which forced companies to halt production and undercut demands at home at the beginning of the new year, China's industrial profit will plunge further in 2020, industrial observers predicted. But they stressed the decline will be mild, as more stimulative policies kick in and production likely to bounce back in the second half. 

The 3.3-percent drop in 2019 was the first full-year decline since 2015. For December alone, industrial profits dropped 6.3 percent against November's 5.4 percent growth, data from the National Bureau of Statistics showed on Monday.

Private firms recorded stable growth last year, at 2.2 percent year-on-year, while foreign firms saw profits drop 3.6 percent year-on-year during the same period.

In particular, the manufacturing companies above a designated scale saw profit going down 5.2 percent year-on-year to 5.19 trillion yuan last year. 

Industrial firms' liabilities rose 5.4 percent from a year earlier to 67.39 trillion yuan by the end of 2019, official data showed. 

"As the world's largest manufacturer and exporter of industrial products, the escalating trade war with the US last year inevitably weighed on companies' profitability," Dong Dengxin, director of the Financial Securities Institute at Wuhan University of Science and Technology, told the Global Times on Monday. 

He added that China, while coping with a boiling trade war, is also in a critical stage of industrial upgrade, which makes 2019 the "hardest year" for industrial companies. 

But in terms of prospects in 2020, observers seem more optimistic despite the onslaught coronavirus, which has prompted companies to suspend production to prevent the spread of the new epidemic. 

"The impact of the virus will be in the first quarter. Looking through the year, consumers will release their subdued demand and factories will enlarge the scale of operation once the epidemic is eradicated…The decline in industrial profit will stabilize and gradually narrow down for the whole year," Dong said.

Analysts also took note of booming high-tech applications involving 5G and artificial intelligence, which they said will drive the industrial profit in 2020.

In 2019, China's GDP grew at 6.1 percent, meeting the official growth target set at between 6 percent to 6.5 percent, NBS data showed. 

Global Times