From January to August, the profits of industrial enterprises above designated size decreased by 2.1%. (Image credit: Getty Images)
[See China, September 28, 2022](See a comprehensive report by Chinese reporter Wenlong) On September 27, China’s official data showed that from January to August 2022, the profits of industrial enterprises above designated size nationwide fell by 2.1%. Experts see the outlook for China’s economy bleak and worrying.
Profits at Chinese industrial firms fell at a faster pace in the January-August period on Sept. 27, as strict “zeroing out” epidemic restrictions and a deepening property slump weighed on domestic demand, increasing demand for a faltering China. economic uncertainty.
According to data released by China’s National Bureau of Statistics, the profits of industrial enterprises above designated size in the first eight months of 2022 fell by 2.1% year-on-year, following a 1.1% decline from January to July.
The statistical scope of industrial enterprises above designated size by the National Bureau of Statistics of China is an industrial legal entity with an annual main business income of 20 million yuan or more.
From January to August, 25 of the 41 major industrial sectors experienced profit declines. Profit growth in the mining sector slowed to 88.1% in the January-August period from 105.3% in the previous seven months due to weaker commodity prices. Manufacturing profits fell further, falling 13.4% in the first eight months, accelerating from a 12.6% drop in the January-July period.
It is worth noting that the National Bureau of Statistics of China did not publish the monthly data for July and August as usual, which also made the analysis agency suspicious.
“The economic recovery faces more uncertainty as momentum is disrupted by a variety of unexpected and external factors, such as extremely hot weather, regional power restrictions and sudden outbreaks of COVID-19,” said Bruce Pang, chief economist at Jones Lang Lasalle, according to Reuters. break out.”
“China will accelerate the implementation of policies to expand demand and promote a sustained and stable recovery of the industrial economy,” Zhu Hong, a senior statistician at China’s National Bureau of Statistics, said in a statement.
Analysts believe that China’s current “zero” epidemic prevention policy is a major constraint on the economy, and say there is little chance that Beijing will ease its policies ahead of the 20th National Congress of the Communist Party of China in October.
“In our view, weak exports and property markets mean that the remaining source of growth support is consumption. To unlock this, China’s approach to Covid-19 needs to shift,” Morgan Stanley said in a research note.
“We expect policymakers to take important steps in the coming months to allow reopening from spring 2023.”
In late August, cities from Shenzhen to Chengdu and Dalian introduced COVID-19 containment measures aimed at containing new outbreaks.
One bright spot in the dismal data was the auto industry, which doubled its profits in August thanks to the purchase tax relief issued by the State Council.
Affected by the hot weather, the profit of the power industry increased by 1.58 times year-on-year.
Sichuan province and the city of Chongqing in southwest China imposed power rationing on industrial production in August as drought reduced hydropower generation and residents increased electricity use amid a severe heatwave.
At the end of August, China’s State Council rolled out another slew of stimulus measures to revive the faltering economy, including a 300 billion yuan increase in the quota of policy financing tools.
Hong Kong’s “South China Morning Post” (SCMP) reported that although China claims to be the world‘s second largest economy, it has been hit by the epidemic and the authorities’ strict “zero” epidemic prevention policy. In the second quarter of this year, China’s economic growth rate was only 0.4 %. Compared with other countries, such as the developing country Malaysia, the economic growth rate in the second quarter increased by 8.9% year-on-year, and Vietnam was 7.7%. The main economic data was not as good as the market expected.
Xing Ziqiang, chief economist at Morgan Stanley China, who participated in a recent webinar hosted by the China Macroeconomic Forum, believes that China’s economic outlook is increasingly worrying: “Despite a technical recession due to inflation-fighting rate hikes , but the U.S. economy will not suffer lasting damage, and the U.S. growth rate is expected to remain stable.”
“But as far as China’s economy is concerned, the top priority is how to get the people and the business community out of the current predicament without leaving permanent scars that affect long-term growth potential,” said Xing Ziqiang.
Source: Watch China
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