China's industrial profits drop further in January-Oct

BEIJING China's industrial firms saw their profits decline further in the January-October period as COVID- 19 outbreaks flared up and cities imposed new virus controls, which can cause a reduction in economic activity.

In the first 10 months of 2022, industrial profits fell by 3.0 per cent from a year earlier. The National Bureau of Statistics data shows a 2.3 per cent drop for January-September, compared to a 2.3 per cent drop for January-September.

The bureau has not reported any standalone monthly figures since July.

The bureau said in a statement that industrial enterprises are facing greater pressure due to recent outbreaks of domestic epidemics, the risk of global economic recession has intensified and industrial enterprises are facing greater pressure.

A debt payment crisis in the country's property sector and a slowdown in consumer spending are reflected in the downbeat data for the world's second-largest economy.

Since October, outbreaks have grown and mounting anger over China's harsh zero-COVID policies that aim to stamp out the disease sparked rare protests by citizens over the weekend. China reported a fourth day of record cases on Sunday.

In the first ten months, profits for manufacturers fell 13.4 per cent, a little less than the 13.2 per cent fall in January-September.

China Everbright Bank analyst Zhou Maohua said that industrial profits were under pressure as prices were weighed down by weak domestic demand and input costs in some manufacturing sectors.

The petroleum, coal, and fuel processing industry saw its profits fall 70.9 per cent. That is a 67.7 per cent drop for the first nine months.

The pace of growth was slow in some sectors that have seen strong profit growth.

In January-October, profits increased 60.4 per cent compared with a 76.0 per cent gain for the first nine months.

Some analysts believe that China's GDP could contract in the current quarter from the third quarter and have cut their 2023 forecasts, predicting the path to reopening the economy will be slow and bumpy.

Analysts from Nomura expect fourth-quarter GDP to shrink by 0.3 per cent from the previous three months, and cut their fourth-quarter growth forecast on a year-on-year basis to 2.4 per cent from 2.8 per cent.

Analysts from Oxford Economics cut their 2022 and 2023 GDP forecasts because they believe that a broadening of measures is expected.

In order to prop up the faltering economy, authorities have recently rolled out a series of measures, including moves to relax some COVID curbs and provide financial support to the property market, which have underpinned market sentiment.

On Friday, China said it would reduce the amount of cash banks must hold as reserves for the second time this year, releasing about 500 billion yuan $69.8 billion in long-term liquidity.

In September, China's industrial output increased by 5.0 per cent from a year earlier, missing expectations for a 5.2 per cent gain in a Reuters poll and slowing from the 6.3 per cent growth seen in September.

Industrial profit data covers large firms with revenues over 20 million yuan from their main operations.