Despite profit decline in the first eight months of 2022, China's industrial firms are on the right track to profit recovery with improved industry structure and government policy support.
Industrial firms with annual main business revenue of at least 20 million yuan (about 2.83 million U.S. dollars) saw their combined profits reach 5.53 trillion yuan from January to August, down 2.1 percent year on year, the National Bureau of Statistics (NBS) said Tuesday.
The combined revenues of these firms sustained a quicker growth pace during the period, rising 8.4 percent year on year to 87.89 trillion yuan, NBS data showed.
"The performance of industrial firms is recovering, and the industry structure has improved," said senior NBS statistician Zhu Hong.
Aerial photo taken on Jan. 26, 2022 shows Rizhao Port in operation in Rizhao, east China's Shandong Province. (Xinhua/Guo Xulei)
POSITIVE CHANGES
Breaking down the data, Zhu pointed out the improvement in business profit structure, noting that curbed momentum in the prices of some commodities eased pressure on downstream producers.
Sixteen out of 41 major industries saw growth in profits in the January-August period. The electrical machinery and equipment manufacturing sector saw profits jump 20.9 percent year on year, and the profits of the manufacturing of chemical raw materials and chemical products rose 5 percent.
Profits of the agricultural and sideline food processing industry fell 7.9 percent, and those of the textile industry dropped 14.1 percent.
The profit decline of the equipment manufacturing industry narrowed significantly on the back of smooth industrial and supply chains, said Zhu.
In the first eight months, profits of the equipment manufacturing industry fell 2 percent year on year, 3.7 percentage points narrower than that in the January-July period.
A worker installs a part of a tunnel boring machine at a production base in Xiaoshan District of Hangzhou City, east China's Zhejiang Province, June 27, 2022. (Photo by Long Wei/Xinhua)
Automobile manufacturing achieved profit growth of 102 percent year on year in August, the fastest growth in a year, boosted by policies to spur auto consumption.
The profits of consumer goods manufacturers have also improved thanks to an array of pro-consumption measures by the government to boost market demand, Zhu noted.
Among the 13 consumer goods manufacturing sectors, eight reported month-on-month profit improvement in August, and four reported double-digit profit gains.
POLICY MIX
For future challenges, Zhu cautioned against an uncertain and unstable external environment, and rising costs for enterprises, adding that the foundation for the profit recovery of industrial firms is not solid.
To cushion the impact of these challenges, China has rolled out a package of effective policies to sustain the momentum of economic recovery and restore growth, including increasing tax refunds and fee cuts, more financing support, and eliminating logistics obstacles.
Staff members work at a workshop of Ningde base of SAIC Motor Corporation Ltd. in Ningde, southeast China's Fujian Province, June 7, 2022. (Photo by Wang Wangwang/Xinhua)
The State Council released a raft of policies at its executive meeting on Aug. 24. New favorable measures include support for private businesses and the platform economy, deferment of payments of government-levied charges, and risk compensation funds for loans to small firms and the self-employed.
At a national teleconference on ensuring the stability of supply and industrial chains in April, Chinese Vice Premier Liu He urged efforts to eliminate obstacles to product flows across the nation.
The meeting said the country will create a "white list" of foreign trade firms and companies in the automobile, medical, and other primary sectors.
China has also granted tax refunds and fee cuts to reduce burdens for businesses, a policy package expected to save around 2.5 trillion yuan for taxpayers this year.
In the next stage, efforts should be made to advance the policy package and its follow-up policies to stabilize the economy, expand domestic demand, step up assistance to enterprises, and promote sustained recovery of the industrial economy, said Zhu.
