BEIJING – The profits of China’s major industrial companies dropped by 14 percent in the January-February period of this year compared to 2018, the Chinese National Bureau of Statistics said on Wednesday, due to seasonal factors and the general slowdown of the Asian giant’s economy amid an ongoing trade war with the United States.
Thus, the combined profits of industrial enterprises with annual revenues of more than 20 million yuan (around $2.9 million) reached a lackluster 708 billion yuan, according to NBS data.
The figures for the first two months of the year were offered as a whole since the festivities for the Lunar New Year were held in China in early February, a time when the country’s industry tends to grind down to a halt.
Zhu Hong, a statistician for the NBS quoted by state media Xinhua, attributed this strong descent to the economic disruptions caused by the public holiday – also known as the Spring Festival – which constitutes an important tradition and usually lasts for an entire week. Zhu said that the festival’s impact was bigger this year than in 2018.
However, the Chinese economy had already been showing signs of stress in recent months resulting from a slump in demand – both domestic and international – linked to the tariff war that was triggered by US President Donald Trump’s protectionist trade agenda.
High-level talks between US representatives and Chinese officials were expected to resume on Thursday with a fresh round of negotiations aimed at ending the current tensions.
Both sides have expressed their willingness to close a deal, although significant hurdles remain.
Trump had said earlier last week that tariffs on Chinese imports may remain for a considerable period of time – even if a trade deal is eventually reached – to ensure that Beijing actually fulfills its commitments.
December of last year had also seen a slight decline in profits (1.9 percent), though in the annual calculation of 2018, industrial profits increased by 10.3 percent, according to the Chinese government.
Zhu said in a statement accompanying the data that the sectors that saw a drag in profits – as well as production and sales – included the automobile, oil processing, steel and chemical products industries.
Price contractions in these key industries contributed to the decline.
In these first two months of this year for which data is available, profits from state-owned industrial companies sank by 24.2 percent year-on-year, while the profits of private firms dropped by 5.8 percent.
Manufacturing and mining companies recorded a reduction in profits of 15.7 percent and 12.6 percent, respectively.
The operating income of the main industrial companies reached 14.8 trillion yuan in the January-February period, with an interannual increase of 3.3 percent.