Industrial profits in China plummeted 8.5% annually in April at the fastest pace since March 2020, while in the first four months of 2022 they grew 3.5%, to 26.58 trillion yuan (about 3.9 trillion yuan). dollars), down on + 8.5% in January-March. The trend is affected by the jump in commodity prices, the breakdown of the supply chain due to the lockdowns against Covid-19 and the war in Ukraine. The outbreaks of Covid “have been widespread in some regions, creating major backlashes and leading to declining profits,” Zhu Hong, an official of the National Statistics Office, noted in a statement.
The collapse of industrial profits, calculated on large companies with an annual turnover of over 20 million yuan generated by the main operations, is a new sign of the difficulties of the Chinese economy, after the collapse of consumption (-11.1%) and of industrial production (-2.9%) in April, with a simultaneous rise in unemployment to 6.1%. Zhu said the eastern and northeastern regions most affected by Covid suffered a drop in profits of 16.7% and 8.1% respectively, while antivirus measures closed factories and clogged highways and ports.
Shanghai blocked by the lockdown
Industrial production at the Shanghai hub, located in the heart of the manufacturing industry in the Yangtze River Delta, plummeted by 61.5% in April on the back of the full block and much more than the -2.9% marked on a level scale. national. Liabilities of industrial companies rose by 10.4% compared to the previous year at the end of April, slightly slower than the 10.5% at the end of March. Currently, the containment of the virus around Shnahgai “has improved and the recovery is proceeding,” added Zhu, predicting that the impact of Covid on industrial companies will gradually be mitigated over the course of the year.
Li Keqiang announces countermeasures
On Wednesday, Premier Li Keqiang acknowledged the weak growth and said the economic difficulties in some respects were worse than in 2020, when the economy was hit by the first Wuhan crisis. “We should strive to ensure reasonable economic growth in the second quarter, lower the unemployment rate as soon as possible, and keep business operations within a reasonable range,” Li said during a nationwide economic video conference with 100,000 virtual attendees.
