China industrial profits plunge 38% in the first two months

China’s industrial profits plunged during the first two months of 2020 as the COVID-19 pandemic dealt a heavy blow to the economy, data from the National Bureau of Statistics showed on Friday.

In the first two months, industrial profits of designated large enterprises, with annual turnover of at least 20 million yuan (US$2.86 million), totaled 410.7 billion yuan, down 38.3 percent from a year earlier.

“Major factors that led to the slump are falling output and sales, rising costs, lower prices for industrial products and reduced margins for most industrial sectors,” NBS official Zhang Weihua said in a note.

China's industrial output and sales fell 13.5 percent and 17.7 percent respectively year on year in the first two months, also largely due to the epidemic.

Broken down by ownership, foreign-funded enterprises and private businesses suffered the heaviest blows, with their profits dropping by 53.6 percent and 36.6 percent, respectively.

Profits among state-owned enterprises saw a decline of 32.9 percent, while those of joint-stock companies were down 33.6 percent.

By category, manufacturing sector profits stood at 30.1 billion yuan, lowering 42.7 percent; while electricity, thermal power, gas and water industry profits saw a decrease of 23.2 percent to 54.8 billion yuan, and that of the mining sector weakened by 21.1 percent to 55.3 billion yuan.

Thirty-seven out of 41 surveyed industrial sectors suffered heavy losses.

The profits of some major industries were more than halved, with the electronic equipment manufacturing, automobile, electrical machinery and equipment manufacturing and chemical industries declining by 87 percent, 79.6 percent, 68.2 percent and 66.4 percent respectively.

Meanwhile, profits in the tobacco, non-ferrous metal, oil and gas extraction and food industries advanced by 31.5 percent, 28.3 percent, 23.7 percent and 2.2 percent respectively.

The medical industry saw profit down by 10.9 percent.

Zhang noted: “Industrial profits are expected to improve as resumption of work and production is accelerating and the temporary shock of the epidemic is being blunted by policy packages from the government.”