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China's industrial profits fall sharply in April amid lockdowns

By Michele Maatouk

Date: Friday 27 May 2022

China's industrial profits fall sharply in April amid lockdowns

(Sharecast News) - China's industrial profits fell sharply in April as Covid lockdowns took their toll, according to data released on Friday by the National Bureau of Statistics.
Industrial profits fell 8.5% on the year, making the fastest decline in two years. There is no official figure available for March, but according to calculations by Pantheon Macroeconomics, industrial profits rose 12.2%.

NBS senior statistician Zhu Hong said: "In April, frequent Covid-19 outbreaks were widespread in some regions, creating big shocks to the production and operations of industrial firms and leading to a drop in their profits."

Craig Botham, chief China+ economist at Pantheon Macroeconomics, said: "April saw a severe tightening of zero-Covid restrictions in China, and a steep drop in economic activity. It is unsurprising, therefore, that profits should also fall.

"The NBS do not provide a y/y number for March for 2022, but we estimate, using the year-to-date index, that industrial profits grew 12.2% year-on-year, so the -8.5% for April represents a stark turnaround. On a month-on-month basis, profits fell 3.4% in April, after growing 2.1% in March.

"The losses were fairly broad, in line with the application of factory closures and restrictions on movement. Particularly large y/y declines were reported for producers of machinery, electronic equipment, and firms supplying heat, gas, and water, industrial demand for which would have fallen off a cliff. Energy extraction still saw strong profit growth y/y, though slower than in March, as China battles to contain energy costs ahead of any reopening."

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