BEIJING (May 27): Profits at China’s industrial firms fell at a slower pace in April, helped by improvements in automobiles and electronics, but the economy faces persistent pressure as activity and demand remains weak after the coronavirus outbreak.
Profits at China’s industrial firms in April fell 4.3% year-on-year to 478.1 billion yuan ($67 billion), after plunging 34.9% in March, the statistics bureau said on Wednesday.
China’s economy has shown patchy signs of recovery as it reopens after several weeks of tough virus containment measures.
But fallout from the pandemic, which paralysed business activity and triggered the first quarterly economic contraction on record, is expected to keep earnings under strain for most of this year.
For the first four months, industrial firms’ profits fell 27.4% year-on-year to 1.26 trillion yuan, compared with a 36.7% slump in the first three months.
Automobiles, special-purpose equipment, electrical machinery and electronics industries notched up significant recoveries in profits in April. Twenty three out of 41 sectors surveyed posted growth last month versus eight in March.
However, the overall profit outlook is not optimistic as market demand has still not recovered, industrial goods prices remain low, and pressure from costs are still high, Zhu Hong, an official at statistics bureau, said in a statement.
Recent data from factory activity to trade have underscored a weak outlook for China and the global economy.
Beijing has stepped up tax and credit relief for virus-ravaged companies since February, but it has refrained from massive economic stimulus for fear of rekindling debt risks.
The uncertainty stoked by the pandemic has forced China to drop its growth target for gross domestic product (GDP) for 2020 for the first time since such annual goals were set three decades ago.
Earnings at China’s state-owned industrial firms were down 46.0% year-on-year for the first four months, versus a 45.5% decline in the quarter ended March, the statistics bureau data showed.
Liabilities at industrial firms rose 6.2% on year at end-April, versus 5.4% growth as of end-March.
Private sector profits declined 17.2% in January-April, narrowing from January-March’s 29.5% fall.
The industrial profit data covers large firms with annual revenue over 20 million yuan from their main operations.
($1 = 7.1410 Chinese yuan)