Profits at Chinese industrial firms plummeted in the first four months of 2023, according to official data released on Saturday, as companies continued to experience margin pressure and weak demand amid a faltering economic recovery.
The benefits fell 20.6% in January-April compared to the previous year, compared to a decrease of 21.4% in the first three months, according to data from the National Statistics Office (ONE).
In April alone, industrial companies reported a year-on-year drop in profits of 18.2%, according to ONE, which only occasionally provides monthly figures. In March, profits contracted by 19.2%.
“In general, today’s data shows that industrial companies, especially private and (state-owned) companies, continue to be affected by a combination of unfavorable factors, such as the base effect, short-term pressure on economic recovery and the downward trend in PPI (producer prices),” said Bruce Pang, chief economist at Jones Lang Lasalle.
Chinese companies are facing weakness in both domestic demand and demand in the country’s main export markets.
The dismal earnings readings come after a series of economic indicators in April, covering industrial production, retail sales and real estate investment, suggested the recovery in the world’s second-largest economy is losing momentum.
Beijing has set itself a modest growth target of around 5% for this year. Signs of a strong recovery after the abrupt end of COVID restrictions late last year had prompted many institutions, including the World Bank, to raise their 2023 growth estimates for China.
However, some investment banks have recently lowered their forecasts for China’s growth to 2023 after being disappointed by the April data. Nomura lowered its forecast, to 5.5% from 5.9% previously, and Barclays revised its view lower, to 5.3% from 5.6%.
Source: Ambito
