Image: Reuters Berita 24 English - The restoration of activity in key production centres helped China's industrial businesses' profi...
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| Image: Reuters |
Berita 24 English - The restoration of activity in key production centres helped China's industrial businesses' profits climb in June, but concerns over a COVID-19 revival have dimmed expectations for future factory output.
According to figures provided by the National Bureau of Statistics (NBS) on Wednesday, profits increased by 0.8 percent in June compared to the same month last year, reversing a 6.5 percent decline in May.
The June report reveals industrial firms are gradually recovering from painful supply chain disruptions in the second quarter, helped by lessening pandemic constraints and government stimulus.
The efficiency of industrial businesses significantly increased as the pandemic was successfully contained and the industrial chain continued to recover, according to a statement from NBS Senior Statistician Zhu Hong.
China's economy saw a severe slowdown in the April–June quarter, underscoring the enormous toll that widespread lockdowns that harmed domestic consumption and business confidence had on activity.
Between January and June of last year, industrial firms' aggregate profits increased 1% to 4.27 trillion yuan ($631.1 billion). According to the data, that was in line with the 1.0 percent growth rate throughout the first five months.
Industrial companies' liabilities increased by 10.5 percent at the end of June, matching the 10.5 percent growth seen at the end of May.
In June, China's industrial output increased by 3.9 percent compared to the same month last year, and factory-gate inflation dropped to its lowest level in 15 months as the nation continues to defy the worldwide trend of rising costs.
A two-month COVID-19 city-wide lockdown has gradually ended, and factory activity has resumed in the Shanghai area. In June, Tesla's Shanghai facility produced more than it had since it launched in 2019.
However, concerns of a COVID revival and the resumption of stringent policies to eradicate infections nationwide pose difficulties for factory output and economic recovery in the second-largest economy in the world.
According to a letter attributed to the local government on Monday, the Chinese tech hub of Shenzhen instructed 100 significant enterprises, including iPhone manufacturer Foxconn, to build up "closed-loop" systems as it confronts COVID-19.
In order to combat fresh outbreaks, the port city of Tianjin, which is home to enterprises connected to Boeing and Volkswagen, as well as the coastal cities of Beihai in Guangxi and Lanzhou in Gansu province, strengthened COVID regulations earlier this month.
While this is going on, authorities are frantically trying to prevent other issues, like a debt crisis in the real estate industry, from spreading to the rest of the economy during a politically delicate year.
Analysts claim that Beijing's rigorous zero-COVID policy must be dropped in order to attain the stated GDP target of roughly 5.5 percent for this year. According to a Reuters survey, growth will fall to 4% in 2022.
The second quarter of China's GDP saw a meagre 0.4 percent growth from a year earlier, which is the poorest performance since the first quarter of 2020, when the initial COVID shock caused the economy to decline by 6.9 percent.
The industrial profit data includes major businesses with primary operations that generate yearly revenues of exceeding 20 million yuan.
1. Chinese Yuan = 6.7662
