China’s industrial profit slipped 3.3 percent year-on-year to 6.20 trillion yuan ($893.69 billion) in 2019, as the nation contended with downward economic pressure amid a bruising trade war with the US and an ongoing industrial upgrade.
Due to the outbreak of the novel coronavirus, which has already forced companies to halt production and undercut domestic demand at the beginning of the new year, China’s industrial profit will plunge further in 2020, industrial observers predicted. But they stressed that the decline will be mild as more stimulative policies kick in, and production is likely to bounce back in the second half of the year.
The 3.3 percent drop in 2019 was the first full-year decline since 2015. For December alone, industrial profits dropped 6.3 percent year-on-year against November’s 5.4 percent growth, data from the National Bureau of Statistics (NBS) showed on Monday.
Private firms recorded stable growth last year, at 2.2 percent year-on-year, while foreign firms saw profits drop 3.6 percent year-on-year during the same period.
In particular, manufacturing companies above a designated scale saw profits decrease 5.2 percent year-on-year to 5.19 trillion yuan.
Industrial firms’ liabilities rose 5.4 percent from a year earlier to 67.39 trillion yuan by the end of 2019, official data showed.
“As the world’s largest manufacturer and exporter of industrial products, the escalating trade war with the US last year inevitably weighed on companies’ profitability,” Dong Dengxin, director of the Financial Securities Institute at the Wuhan University of Science and Technology, told the Global Times on Monday.
He added that China, while coping with a boiling trade war, is also in a critical stage of its industrial upgrade, making 2019 the “hardest year” for industrial companies.
But in terms of prospects for 2020, observers seem more optimistic despite the outbreak of the novel coronavirus, which has prompted companies to suspend production to prevent the epidemic’s spread.
“The impact of the virus will be felt in the first quarter. Looking through the year, consumers will release their subdued demand and factories will enlarge the scale of operations once the epidemic is eradicated… The decline in industrial profit will stabilize and gradually narrow for the whole year,” Dong said.
Analysts also took note of booming high-tech applications involving 5G and artificial intelligence, which they said will drive industrial profit in 2020.
In 2019, China’s GDP grew at 6.1 percent, meeting the official growth target set at between 6 percent and 6.5 percent, NBS data showed.
Employees work on the production line of a steam turbine manufacturer in Harbin, capital of Heilongjiang province. Photo:Xinhua
