Private enterprises in China’s industrial sector reported a 1.7 per cent drop in profits in the first two months of the year, according to official figures that highlight the challenges they face from the latest Covid-19 outbreak . Over the same period, state-owned enterprises in the sector saw profits rise by 16.7 per cent, according to figures from the National Bureau of Statistics released on Sunday. The Covid-19 outbreaks that have been reported nationwide since late February are exacerbating the challenges small and medium-sized enterprises face, in addition to rising raw material and logistic costs and shrinking domestic demand, according to analysts. “The domestic outbreaks and the varying levels of lockdowns in different cities will inevitably worsen the supply chain problems in the manufacturing sector,” said Bo Zhuang, a China economist at Loomis, Sayles & Company, an investment firm. “Demand is shrinking both domestically and internationally, due to the coronavirus outbreaks in China, and geopolitical tensions and high inflation rates internationally. ‘More chaos’ to come for global shipping if China’s virus lockdowns persist “Private enterprises in China, especially in the manufacturing sector, face grim challenges this year and profit growth is likely to continue to slow for private enterprises.” The number of daily new cases now stand at levels unseen since the beginning of 2020 as the highly transmissible Omicron variant spreads like wildfire across most of Chinese provinces, forcing businesses to shut. China reported 5,550 new cases on Saturday, including 4,333 asymptomatic cases. Jilin province and the city of Shanghai are currently recording the highest number of new cases. Jilin reported 2,078 cases in total, including 1,007 asymptomatic ones. Meanwhile, Shanghai recorded 2,676 new cases on Saturday, only 47 of which were symptomatic – its highest total since the current outbreak began three weeks ago. Despite mounting new cases, the Shanghai health authorities have repeatedly stressed there will be no citywide lockdown , citing the potential impact on the national and global economy, even as the neighbouring city of Suzhou suspended indoor dining and closed gyms and cinemas. Shenzhen, another major economic hub, has reopened after a lockdown earlier this month saw public transport suspended for a week and residents’ movements restricted. Chinese student protest forces university to ease Covid-19 lockdown “Shanghai is not only home to Shanghai residents, it plays an important role in national economic and social development and even affects the global economy,” Wu Fan, an expert member of Shanghai’s Covid-19 response task force, said on Saturday. “If the city came to a complete stop, there would be a lot of international cargo left floating on the East China Sea, which would have an impact on the national and global economy. All Shanghai citizens should take such a big-picture view.” The city is conducting mass testing and has mobilised 4,000 police officers to help with the process and other Covid-related matters, the news portal ThePaper.cn reported. A total of 14 million people in Shanghai had completed a rapid antigen test that detects early infections of the virus, said Wu Qianyu, a city health official said on Sunday morning, adding that tests were continuing. China has imposed stringent measures nationwide under its dynamic zero-Covid strategy. After reporting one positive case, Huainan, a city of nearly 3.5 million people in Anhui province that borders Shanghai, ordered residents not to leave unless they could provide a negative test result taken within the previous 48 hours. The northern city of Tianjin issued an order around midnight on Saturday, telling its 13.5 million residents to get tested after it reported 46 cases that day.