Private industrial enterprises in China see profits fall in first two months of the year

The sector was already facing problems such rising costs and shrinking demand before the latest wave of Covid-19 cases hit the country

At the same time, profits rise by 16.7 per cent at industrial state-owned enterprises, official figures show

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Private enterprises faced challenging conditions before the latest wave of Covid cases hit the country. Photo: AFP

Published: 7:30pm, 27 Mar 2022Updated: 8:29pm, 27 Mar 2022

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.

“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.”

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