Industrial profit in China down further under pressure from ‎Covid restrictions

Large Chinese industrial companies witnessed a further decline in gross profit between January and October as the spread of Covid-19 increased and cities imposed new restrictions to combat the virus, including closures in certain places, which negatively affected economic activities.

‏According to “Reuters”, data from the Office for National Statistics published today, Sunday, showed that industrial profits fell 3 percent in the first ten months of 2022 on an annual basis, compared to a decline of 2.3 percent in the period from January to September.

The statistics bureau has not released figures for each month independently since July. Profits declined in 22 out of 41 large industrial sectors in China.

“Recent waves of outbreaks of local epidemic infection are repeated, recession risks in the global economy have intensified, and industrial enterprises are facing greater pressure,” the office said in a statement.

The bleak data for the world’s second-largest economy reflected a debt crisis in the real estate sector and a sharp slowdown in consumer spending.

The industrial sectors that witnessed the sharpest declines are oil, coal and fuel, whose profits declined by 70.9 percent, compared to 67.7 percent in the first nine months of the year.

Even some sectors that witnessed strong profit growth suffered from a noticeable slowdown in the pace of this growth.

Some analysts now believe that China’s gross domestic product will contract in the current quarter compared to the third quarter, and have lowered their forecasts for next year, expecting that the path of resuming economic activities as usual will be slow and difficult.

The industrial profit data covers large enterprises with annual revenues of more than 20 million yuan from major operations.