industrial profits

The profits of China’s industrial enterprises above designated scale in the first two months of 2023 dropped 22.9 percent year-on-year, affected by multiple external factors, with the figure expected to gradually rebound amid the recovery of market demand, data from the National Bureau of Statistics (NBS) showed on Monday. 

An analyst noted that the figure was dragged down by the Chinese New Year holidays while the enterprises were also adjusting to the country’s optimized COVID-19 response measures. A strong rebound of profits is expected during the following months. 

Industrial profits stood at 887.21 billion yuan ($128.95 billion), per the NBS data. Even though the manufacturing production is rebounding, market demand has not fully recovered, Sun Xiao, a NBS statistician said on Monday. 

From the perspective of operating costs, the enterprises were forced to deal with a decline in revenues rather than the costs, resulting in the plunge of corporate gross profits and dragging down the industrial profits by 18.6 percentage points from the same period last year.

As for prices, impacted by a relatively high base of Producer Price Index, prices of products made by the enterprises fell 1.1 percent year-on-year, further saddling corporate earnings, said Sun. 

Chinese enterprises had to adjust their operations amid the changes in the nation’s COVID-19 management while battling against previous outbreaks in January, which affected their expansion and investment plans, Dong Dengxin, director of the Finance and Securities Institute of the Wuhan University of Science and Technology, told the Global Times on Monday.  

Dong added that the Chinese New Year holidays during the January-February period also impacted business operation, stressing that market confidence is gradually gaining pace after the Chinese New Year as the negative impact from the outbreaks subsided. 

Despite the drop in profits, some industrial sectors have recorded accelerated growth and rebounded from January to February. 

The profits for electricity sector rose rapidly while the mining industry maintained a high level of profitability. Amid the restoration of industrial production, the surging electricity demand drove up the sector’s profits by 53.1 percent year-on-year.

And, the profits for electrical machinery sector recorded a yearly growth of 41.5 percent in the first two months, boosted by rising demand for electric batteries, photovoltaic equipment, and other products. Meanwhile, the loss in profits for consumer goods manufacturing sector lessened amid a continuous pickup in domestic consumption. 

In the coming months, Sun noted that the industrial profits are expected to keep rising, to be led by factors that see an acceleration of market demand recovery, and improved balance between production and market demand. 

Dong noted that China’s economic recovery returned to normalcy at the end of February and the beginning of March, and he expected a further improvement in industrial profits in March. 


Global Times