Daily Management Review

China's July industrial profits fell due to COVID restrictions and heatwaves


China's July industrial profits fell due to COVID restrictions and heatwaves
The profits of China's industrial companies declined in July, reversing prior gains as new COVID-19 curbs reduced demand and reduced factory margins while production was threatened by power shortages brought on by heatwaves.
The National Bureau of Statistics reported on Saturday that the 1.0% growth registered during the first six months was completely erased by the 1.1% decline in profits at China's industrial firms from January to July of last year.
The bureau did not provide July stand-alone data.
As new COVID curbs were implemented in the month, factory production and activities in important manufacturing hubs like Shenzhen and Tianjin were negatively impacted.
China's industrial output growth slowed in July from 3.9 per cent in June to 3.8 per cent on a year-over-year basis.
Searing heatwaves have swept across China's vast Yangtze River basin since mid-July, hammering densely populated cities from Shanghai to Chengdu. Liabilities at industrial firms jumped 10.5% from a year earlier in July, matching the 10.5% increase in June, the statistics bureau said.
China's economy narrowly escaped contraction in the three months to June, as strict COVID control restrictions and a distressed property sector pummelled demand. Policymakers are striving to prop up the flagging economy by doubling down on infrastructure spending.
The industrial profit data covers large firms with annual revenues of over 20 million yuan ($3 million) from their main operations.