BEIJING (Reuters) – Profit at China’s industrial firms in 2022 fell 4% from a year earlier, official data showed on Tuesday, squeezed by the impact of strict COVID-19 containment measures and a slump in the property market.
At 8.4 trillion yuan ($1.24 trillion), the decline compared with the 3.6% fall recorded after the first 11 months, showed data from the National Bureau of Statistics (NBS). The performance fell far short of the 34.3% gain seen in 2021.
The bureau did not report a profit figure for December alone.
Industrial output in December was 1.3% higher than in the same month a year earlier, versus 2.2% gain in November. Manufacturing activity was hit in December by the rampant spread of COVID-19 that kept workers indoors after the government ditched some of the world’s toughest pandemic controls early that month.
Economists expect economic activity to normalise this year, supported by recovery in consumption and travel, though some said declining foreign demand may cause the manufacturing sector to underperform.
“Many export-oriented factories either closed earlier or resumed production later than normal this year,” economists at Barclays said in a client note, referring to factory closures for the Lunar New Year holiday which this year fell in January.
The NBS manufacturing purchasing managers’ index showed factory activity rebounded in January, supported by the easing of the latest wave of COVID-19 infection cases.
Factory owners are eager to get on with what they expect to be a gradual recovery for their sector, which makes almost a third of the world’s manufactured goods and is a growth engine of the world’s second-largest economy.
At a meeting chaired by Premier Li Keqiang, the cabinet on Saturday said China should aim at helping its economy pick up in early 2023, focusing on consumption recovery as a major driver.
China’s economic growth in 2022 slowed to one of its weakest rates in nearly half a century as the economy was hit hard by strict COVID-19 curbs and a property market slump.
Industrial profit data covers firms with annual revenue above 20 million yuan from their main operations.
($1 = 6.7548 Chinese yuan)
(Reporting by Ellen Zhang, Ella Cao and Ryan Woo; Editing by Bradley Perrett and Christopher Cushing)
