Official data released this Monday showed that large and mid-size enterprises in China experienced significant losses in profits during March. The figure showed a slight decline during the first two months of the year, but March values were the most considerable profit loss of the year.
According to Caixin Global, the profits of China's vast and mid-size industrial enterprises dropped by 34.9 percent on an annual basis last March. The drop in profits was only at 38.3 percent for the first two months of the year. The data also showed that these enterprises earned annual main-business revenue of at least 20 million yuan.
Last Monday, the National Bureau of Statistics revealed that demand for industrial products has not fully recovered from the pandemic effects on the Chinese economy. Profit declines of industrial enterprises are still steep. According to an economist with the Bureau Zhang Weihua, profits in these industries remain challenging, especially after China's state-owned enterprises posted a decline of 45.5 percent on its annual profits.
Private firms, on the other hand, reported a 29.5 percent fall. Zhang added that the decline in profits of these private firms also indicated a narrow situation for the industry.
Factory-gate prices for automobile, electronics, chemical, and electrical machinery sectors also declined, reported Market Watch. The profits for these industries fell between 47 and 80.2 percent as well. Zhang added that industrial profits warmed in March as the Chinese economy resumed work and production nationwide that drove sales up for industrial products.
On the other hand, industrial firms operating in the high-tech manufacturing sector rebounded with a 0.5 percent growth during March after experiencing a 37.1 percent fall during January and February. Overseas-funded companies also experienced a profit slump in March compared to values from January and February that were higher.
Last month, the industry improved, but its profit decline remained consistent. According to Xinhuanet, the causes of the decline were mounting stockpile, rising production costs, falling industry prices, and declining market demand. Zhang claimed that the industrial sector has yet to recover from the pandemic impacts on the economy fully. He also noted that there remains uncertainty for the rest of the year.
Chemicals and ferrous metals processing also took a big hit from China's efforts to reopen its economy. According to the South China Morning Post, the sluggish March period showed many challenges that the industry would face. It currently suffers from demand-side shocks after experiencing supply shocks for the first two months of the year.
