Data published by the National Bureau of Statistics (NBS) showed that from the beginning of 2022 (through August), the profits of industrial companies decreased by 2.1% per annum, to CNY 55.25 trillion, after falling by 1.1% per annum in the first seven months of 2022. The larger decline came after China reported an improvement in industrial production, which grew 4.2% year-on-year in August, compared with a 3.8% increase in July.
The drop in industrial profits was driven by strict coronavirus restrictions, the weakening of the yuan and the real estate crisis, which increased uncertainty about the prospects for the economy.
NBS said that a drop in profits was recorded in 25 of the 41 major industries. Profit in the mining sector increased by 88.1% per annum after an increase of 105.3% per annum from January to July. The weaker growth was due to falling commodity prices. Meanwhile, profits in the manufacturing sector fell by 13.4% per annum, which was stronger than the fall of 12.6% per annum in the first seven months of 2022.
Analysts consider China's current policy to combat COVID-19 a major obstacle to the economy and say it is unlikely that Beijing will ease its policy before the Communist Party congress in October.