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China’s Industrial Profits Crash To Their Lowest Since 2011 As The Country’s Economic Woes Mount
Chinese President Xi Jinping (Greg Bowker - Pool/Getty Images)
Impacted by a combination trade war with the United States and domestic economic slowdown, China’s industrial firms saw their profits plunge by 14 per cent in the first two months of 2019, Chinese’s official news agency Xinhua reported.
Profits notched by China’s industrial firms in January and February stood at 708 billion yuan ($105.4 billion) for January and February, as per figures released by the National Bureau of Statistics (NBS) on Wednesday (28 March).
Combined profits of industrial firms with annual revenues of more than 20 million yuan (about 2.98 million U.S. dollars) stood at 708.01 billion yuan in the first two months of 2019, down 14 per cent year on year.
The sharp decline in profits represents the country’s worst performance since October 2011 when it moved to a new methodology for measuring industrial profits.
Attributing the slump to the Lunar New Year holiday, the county’s top statistical body said “Compared with January-February of last year, this year's holiday factor has a longer impact on the production and operation of industrial enterprises”.
"After being adjusted for the Spring Festival factor, the profits of major industrial firms were basically flat or slightly down from the same period of last year," a statement quoted Zhu Hong, an NBS senior statistician, as saying.
Auto, petroleum processing, steel and chemical industries saw profits markedly pared by falling product prices, dragging the overall industrial profit growth down by 14.2 percentage points, according to Zhu.
China’s automotive sector has also been experiencing massive slowdown with a reported profit fall of 42 per cent and eight successive months of decline in sales volume.
Chinese authorities have pledged to continue with the series of supply-side structural reform that they have initiated and also plans to roll out a slew of measures to cut taxes and fees for firms, in response to increased downward pressure on the economy.
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