China's Industrial Profits Fall 21.4% in Q1... Slight Improvement in March

Despite the transition to With-Corona, China's industrial profits in the first quarter (January to March) were recorded to have decreased by more than 20% compared to the previous year.

On the 27th, the National Bureau of Statistics of China announced that industrial profits in the first quarter decreased by 21.4% compared to the same period last year. China's industrial profits indicate the profitability trends of enterprises in the industrial sector and are calculated based on companies with annual sales exceeding 20 million yuan (approximately 800 million KRW). Looking at March alone, profits fell by 19.2%, showing a slight improvement compared to January-February (-22.9%). However, this was significantly below market expectations (first quarter, -12.2%).

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Sun Xiao, a senior statistician at the National Bureau of Statistics, stated, "Thanks to improvements in macroeconomic performance and the recovery of market demand, the operating profit growth rate of industrial enterprises above designated size has appeared since October 2018," adding, "Although the economic situation improved and market demand recovered in March, the overall scale of industrial profit losses remains large."

By industry, only the production and supply sectors of electricity, gas, and water showed profit increases, rising 33.2% year-on-year in the first quarter. For March alone, the growth rate was 27.6%. The profit growth rate of the power industry was still high at 41.9%, according to Chinese economic media Caixin. Light industry (-5.8%) and manufacturing (-29.4%) also saw profits decline compared to last year.

Cost pressures on companies also remained evident. In the first quarter, the cost per 100 yuan of revenue for industrial enterprises was 85.04 yuan, an increase of 0.91 yuan compared to the previous year. As of the end of March, the debt-to-asset ratio of industrial enterprises above designated size was 57.1%, up 0.3 percentage points compared to January-February. Among them, state-owned enterprises were at 57.5%, up 0.1 percentage points, and private enterprises were at 59.6%, up 0.6 percentage points.

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