Corporate Profits Plummet Due to Lockdown in China

Industrial Companies' Profit Growth Rate Stands at 3.5% by Late April... Plummets 6%p in One Month
Overseas Companies Entering China Also Hit Hard, Recording Negative Growth

[Asia Economy Beijing=Special Correspondent Jo Young-shin] The 'Zero (0) COVID Policy' due to the resurgence of COVID-19 has significantly reduced corporate profits. It appears that profits plummeted as the number of operating days decreased due to lockdowns and other COVID-19 prevention policies.

Source: National Bureau of Statistics of China

China's National Bureau of Statistics announced on the 27th that the profit growth rate of industrial enterprises above a designated size from January to April recorded 3.5% compared to the same period last year. The profit growth rate of industrial enterprises from January to March was 8.5% compared to the same period last year. In just one month, the profit growth rate plunged by 6 percentage points.

By sector, the profit growth rate of industrial enterprises related to electricity and gas recorded minus (-) 29.3%, directly impacted by the lockdowns.

The profit growth rate of industrial enterprises related to manufacturing was also recorded at minus 8.3%, taking a direct hit.

The shock from the lockdowns was not avoided by overseas enterprises (including Hong Kong and Macao). The profit growth rate of overseas industrial enterprises until April was minus 16.2%.

Zhu Hong, a statistician at the Industrial Department of the National Bureau of Statistics, said, "In April, the nationwide outbreak of the epidemic had a significant impact on the production and operation of industrial enterprises, resulting in a decrease in corporate profits." He added that the profits of industrial enterprises located in the industrial regions of the eastern and northeastern areas decreased significantly compared to the previous year.

However, he added that the profits of industrial enterprises related to raw materials such as mining and chemicals increased, reflecting the rise in international raw material prices.

The National Bureau of Statistics emphasized that it is actively responding to the epidemic according to the policies and decisions of the Party Central Committee and the State Council.

It also stated that the government is ensuring energy supply and supporting the real economy through bailouts, and as the epidemic prevention and control situation in the Yangtze River Delta region, including Shanghai, is improving, the profit growth trend of industrial enterprises is expected to improve in the future.