China’s internet firms rebound with profits up by nearly 50 per cent this year as broader economic recovery lags
- The leap in profits came with a nearly 3 per cent uptick in revenue for China’s internet industry, improving from the 1 per cent decline for 2022
- China‘s tech industry has rebounded from a two-year crackdown from Beijing, but economic growth is still slower since the country loosened Covid controls
Profit for China’s internet industry surged 43 per cent in the first five months of the year in a show of vitality as tech giants emerged from a two-year crackdown despite a slower-than-expected post-Covid economic recovery.
Profits for internet firms reached 57.6 billion yuan (US$7.9 billion) from January to May, according to a report released by the Ministry of Industry and Information Technology (MIIT) on Saturday. Last year, the agency reported industry profits of 49.5 billion yuan for the same period, which would have been a 16 per cent gain without any revisions or change in methodology. The MIIT did not account for the discrepancy.
Revenue was also up slightly at 2.8 per cent to 531 billion yuan, according to the report, which looks at companies providing internet-related services with annual revenue of at least 20 million yuan.
The profit jump is in stark contrast with last year, when profits tumbled 14.8 per cent year on year for the first five months. This year, the industry has sought to put a sweeping crackdown from Beijing in its rear-view mirror.
Beijing started cracking down on internet firms at the end of 2020 in the name of antitrust, data security and reining in the “disorderly expansion of capital”, but the crackdown had largely eased by the end of last year.
Strict measures to control the spread of Covid-19 also weighed on the economy and started winding down in December. The recovery so far has been slower than expected.
National retail sales reached 18.8 trillion yuan for the period, up 9.3 per cent year on year. Growth accelerated from 8.5 per cent in the first four months.