On Sunday, data released by China's National Bureau of Statistics showed that after a 16.8% decrease in the first half of this year, profits of enterprises in the first seven months fell by 15.5% year-on-year. Profits of industrial enterprises in China in July fell by 6.7% year-on-year, marking the seventh consecutive month of decline. The stumbling recovery from the pandemic of the world's second-largest economy has seen demand weaken, squeezing businesses.
National Bureau of Statistics statistician Sun Xiao stated in an accompanying statement that the economic recovery following the pandemic has been stumbling, with weak demand putting pressure on corporate profits. However, the decline in commodity prices has eased the pressure on raw material costs for midstream and downstream industries.
Additionally, large manufacturing enterprises in China reported losses in the first half of the year, with the engineering company China Aluminum Corporation reporting a net loss of 830.6 million yuan ($114.2 million), compared to a net profit of 123.6 million yuan in the same period last year.
Data also showed that in the first seven months of this year, profits of state-owned enterprises fell by 20.3%, foreign-funded enterprises by 12.4%, and private enterprises by 10.7%. Of the 41 major industrial sectors, 28 saw profit declines, with the ferrous metal smelting and rolling processing industry experiencing the largest profit decline, at 90.5%.
Affected by factors such as the worsening downturn in the real estate market, weak consumer spending, and a significant decline in credit growth, the economic recovery has been lackluster, prompting China's central bank to lower interest rates and promise further support. This month, the central bank stated it would maintain its policy "precise and powerful" to support economic recovery.
Although the central bank of China has recently reduced some interest rates in succession, it has not alleviated the pessimism of consumers and investors regarding the future economic outlook, nor has it boosted the financial market's confidence in the real estate and certain financial institutions. Regarding whether more significant measures will be introduced to support economic growth in the future, the central bank said that flexible decisions would be made based on the actual situation.
