Profits at Chinese industrial firms fall at slower pace

BEIJING • Profits at China's industrial firms fell at a slower pace last month, helped by improvements in cars and electronics, but the damage wrought by the coronavirus crisis is set to keep the economy and businesses under pressure for most of this year.

Earnings fell 4.3 per cent year on year to 478.1 billion yuan (S$94.8 billion) last month, after plunging 34.9 per cent in March, according to data from the statistics bureau yesterday.

China's economy has shown patchy signs of recovery as it reopens after several weeks of tough virus containment measures. For the first four months, industrial firms' profits fell 27.4 per cent year on year to 1.26 trillion yuan, compared with a 36.7 per cent slump in the first three months. Cars, special purpose equipment, electrical machinery and electronics industries notched up significant recoveries in profits last month.

Twenty-three out of 41 sectors surveyed posted growth last month versus eight in March.

However, the overall profit outlook is still not optimistic as demand has yet to recover, industrial goods prices remain low, and pressure from costs are still high, said the statistics bureau.

Earnings at China's state-owned industrial firms were down 46 per cent year on year for the first four months, slightly faster than a 45.5 per cent decline in the quarter ending March, the data showed.

Downward pressure on prices continues to hurt profits, particularly in the commodity and heavy industry sectors dominated by state-owned enterprises (SOEs), said Mr Louis Kuijs of Oxford Economics. "Given our subdued outlook for commodity prices, we expect the profitability of SOEs and heavy industry to continue to struggle in the coming months," he added.

REUTERS

A version of this article appeared in the print edition of The Straits Times on May 28, 2020, with the headline 'Profits at Chinese industrial firms fall at slower pace'. Print Edition | Subscribe