Profits fell 8.5% from a year earlier as lockdowns squeezed profits and disrupted factory activity.
Profits at Chinese industrial companies fell at the fastest pace in two years in April as supply chain disruptions caused by high raw material prices and COVID-19 restrictions squeezed profits and disrupted factory activity.
Profits fell 8.5% from a year earlier, the statistics office said on Friday, compared with a 12.2% rise in March that Reuters calculated based on official data. It was the biggest drop since March 2020.
The industrial sector has been hit hard by draconian and widespread anti-virus measures that have closed factories and clogged highways and ports.
Industrial output in Shanghai’s commercial hub, the manufacturing hub of the Yangtze River Delta, plunged 61.5% in April and was in full lockdown, well above the 2.9% drop across the country.
Profits at industrial companies rose 3.5 percent year-on-year to 2.66 trillion yuan ($395 billion) in the January-April period, down from an 8.5 percent increase in the previous three months, the Bureau of Statistics said.
Growth in economic activity in the world’s second-largest economy was very weak last month as exports lost momentum and the real estate sector wobbled.
“Reasonable economic growth”
On Wednesday, Premier Li Keqiang acknowledged weak economic growth and said the difficulties in some areas were worse than in 2020 when the economy was first hit by the COVID-19 outbreak.
“We must work hard to ensure reasonable economic growth in the second quarter, reduce the unemployment rate as soon as possible, and keep the economy operating within a reasonable range,” Li Keqiang said at the meeting.
China recently Lower benchmark lending rates for business and household loans The mortgage reference rate was lowered for the second month in a row, the first time in nearly two years.
While policymakers pledged more support for the faltering economy, many analysts cut their full-year growth forecasts, noting the government has shown no signs of loosening its “coronavirus zero” policy.
At the end of April, liabilities of industrial companies rose 10.4% from a year earlier, down slightly from 10.5% at the end of March.
Industry profit data covers large enterprises with annual revenue from main business exceeding RMB 20 million (US$ 2.97 million).