Industrial Profits in China Fall Due to Strict COVID Restrictions

  • Setindiabiz Team
  • September 28, 2023
Industrial Profits in China Fall Due to Strict COVID Restrictions
In China, industrial firm profits are rapidly declining from January to August due to COVID regulations, which have curtailed domestic demand, resulting in an economic decline.

The Impact of COVID-19 on China’s Economy

The Impact of COVID-19 on the Global Economy: A Report
Industrial profits decreased 2.1% year on year in the first eight months of 2022, following a 1.1% fall in January-July, according to National Bureau of Statistics (NBS) statistics issued on Tuesday.
The administration did not release separate numbers for August or July.
The Chinese economy surprised observers in August, with faster-than-expected growth in manufacturing output and retail sales, but a housing crisis and COVID lockdowns impacted on the future.
Jones Lang Lasalle’s chief economist, Bruce Pang, stated:
“The economic recovery is facing more uncertainties, as the momentum was disturbed by a variety of unexpected and external factors such as extreme hot weather, regional power restrictions and COVID flare-ups.”
Profits decreased in 25 of 41 major industrial sectors between January and August. Due to lower commodity prices, profit growth in the mining industry fell to 88.1% year on year in January-August, down from 105.3% in the first seven months.
Profits in the manufacturing sector fell 13.4% in the first eight months, following a 12.6% dip in January-July.
Senior NBS statistician Zhu Hong stated in a separate statement that:
“China will accelerate the implementation of policies to expand demand, and promote a sustainable and stable recovery of the industrial economy.”

What Exactly is China's Current Zero-COVID Policy?

Analysts perceive China’s present zero-COVID policy as a key economic barrier, and they see little likelihood of Beijing relaxing its zero-COVID policy before the Communist Party Congress in October.
“Weaker exports and property markets mean that the remaining source of growth support is consumption, in our view. To unleash that, a shift in China’s COVID management approach is needed,” in a research note, Morgan Stanley stated. “We expect policymakers to take important steps in the coming months that would allow reopening from spring 2023.”
COVID restrictions were implemented in places ranging from Shenzhen to Chengdu and Dalian in late August, with the goal of preventing further pandemics.
China’s industrial revenue grew 4.2% year on year in August, following a 3.8% increase in July.
Industrial business liabilities increased 10.0% year on year in August, somewhat slower than the 10.5% increase in July.
One bright light in the otherwise distorted picture was the automobile industry, which benefited from lower purchase taxes and saw earnings more than double in August.
Profits in the energy sectors increased 1.58 times year on year in August, thanks to increasing demand for energy as a result of the hot weather.
Drought restricted hydropower generation in China’s southwestern Sichuan province and Chongqing area in August, while locals increased electricity demand during severe heat waves.
In late August, China’s cabinet proposed further stimulus measures to strengthen the country’s struggling economy, including a 300 billion yuan increase in the cap on policy financing tools.
Data on industrial profits represent significant firms with yearly sales from their main operations surpassing 20 million yuan.

Leave a Reply

Your email address will not be published. Required fields are marked *

Talk To An Expert

*Your Information is safe with us | Privacy Policy

Exclusive Offer For CA, CS, CMA, Advocate & Tax Practitioners

Apply for Professional Tax Registration

The Professional Tax is mandatory for every company, LLP, GST-registered business, and other applicable professionals. Registration must be obtained within 30 days of incorporation or registration date. Comply now to Avoid Penalty.

Professional Tax Applicable States

Free consultation and calculator of dues, interest & penalty, if any.

Shops & Establishment Act Registration

(Mandatory to all commercial establishments in every state)
All new establishments must register with the office of the Labour Commissioner (Under the applicable state Shops & Establishment Act) within 30 days of their incorporation for companies or LLPs or the start of business for proprietorships or other businesses.
Free consultation and help to calculate dues, interest & penalty, if any.

Protect Your Trademark Now!

(We help you file trademarks in India and abroad)
Don’t let copycats steal your Trademark or Brand. Register your trademarks now in India to protect your brand, logo, slogan, etc. We have helped over 15K Brands secure their IP.

You Can Protect the Following

Free consultation and Trademark Search in Governemt Database