Profits across China’s industrial firms above designated size improved in May from April as domestic epidemic prevention efforts continued to take effect, factories are ramping up the resumption of work and the supply chaos and disrupted factory activities have been largely addressed.
Profit loss at China’s industrial firms above designated size narrowed in May. Profits shrank 6.5 percent from a year earlier, narrowing from an 8.5 percent slump year-on-year in April, the National Bureau of Statistics (NBS) data released on Monday.
The improved profits came as a result of improved supply chain function and reduced operation cost and tax burden on enterprise, Zhu Hong, senior NBS statistician, said in a statement.
“The gradual recovery of production and industrial and supply chains in May has boosted the sales of industrial enterprises and created favorable conditions for the improvement of corporate profits,” Zhu said.
The expenses on business also fell in May after policies on tax and fee cuts continued to have a positive effect, Zhu added.
Notably, industrial firms from the COVID-hit eastern and northeastern regions have seen their profit declines narrow in May.
Although profits at industrial enterprises in the Yangtze River Delta and northeast China still fell year-on-year in May, the decline significantly narrowed from the previous month, as enterprises ramp up resumption of work and production, Zhu said.
Among them, East China’s Shanghai and Jiangsu Province, Northeast China’s Jilin and Liaoning provinces saw their profit decline narrow by more than 20 percentage points from last month.
With the gradual recovery of market demand and the policies to promote consumption, the profits of basic consumer goods also recovered.
Profits in the liquor and beverage and food manufacturing sectors rose 21.1 percent and 7.7 percent year-on-year respectively in May, accelerating from the previous month
Industrial firms’ profits grew 1 percent year-on-year to 3.44 trillion yuan ($514.28 billion) for the January-May period, slowing from a 3.5 percent gain in the first fourth months, the statistics bureau said.
It is expected that the industrial profit growth will continue improving after the epidemic in China is brought under control, and economic activities picked up at a faster rate, Zhou Maohua, a macroeconomist at Everbright Bank, told the Global Times on Monday.
China’s cabinet, the State Council launched a basket of 33 measures to stabilize economic growth recently including extending value-added tax refunds to more industries, a move that is expected to increase tax refunds this year to a total of 1.64 trillion yuan.
China’s coordinated efforts to drive economy growth while containing the virus as well as the stimulus policies to table economy will effectively reduce the financial burden of enterprises and ease the financial pressure on industrial enterprises, Zhou said.
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