China’s leading industrial companies are showing a huge increase of 66.9% in their profits as the world economy has taken the lead in getting out of the plague and has proven to be fast and pile up with factories. Official data from the National Bureau of Statistics (SNB) showed on Tuesday, dismissing fears that raw material costs would rise.
China’s industrial output gradually recovered in the first half of the year, as business operations continued to improve and growing profits were recorded. Major industrial companies reported a combined profit of 4,220 billion yuan (54 549 billion), up 66.9% over the past two years and 20.6% year-on-year.
More than 70% of the major industrial enterprises (turnover greater than 20 million yuan) recorded profit levels before the Kovid-19 level. Profits from the mining and raw materials manufacturing sectors grew significantly, showing 133% and 183%, respectively. Leading manufacturing companies ‘profits rose 62% and consumer goods manufacturers’ profits rose 38.6%.
With the exception of special izing companies that specialize in the production and processing of raw materials that have benefited significantly from rising wholesale prices, high-tech companies and equipment manufacturers have benefited from the rapid increase in their profits. In particular, the new Energy Vehicle (VEN) has generated special interest among many consumers despite the epidemic context.
The increase in demand in the manufacturing sector – as a counter-ulterior to a large order wave – soon returned to work and production, especially in China, after the virus hit. The country has become the only active economy with fully functioning supply chains and the rest of the world is still fighting the virus. As a result, a large number of exporters around the world are overwhelmed by orders.
“Generally, the profits of industrial companies gradually recover in the first half of the year and their operations continue to improve. However, the profit imbalances of manufacturing companies remain relatively slow, with private and small companies reporting a slower recovery, ”said SNB’s Jayesh stat statistician Shu Hong.
He added that the major increase in wholesale commodity prices is putting more financial pressure on lower companies and weakening industrial and supply chains.
In June alone, major industrial enterprises made a profit of 791.8 billion yuan, a growth of 20% year-on-year. But that rate was down 16.4 percent from a month earlier.
Tian Yoon, former deputy director of the Beijing Economic Operations Association, said weaker-than-expected domestic consumption weakened industrial profit growth. According to him, the country’s two-year average consumption growth is less than 5% in the first half of the year, which is lower than the 6% growth forecast.
Taking into account the country’s relatively loose monetary and monetary policy as well as buoyancy export markets, Chinese industrial companies expect overall profits to double-digit growth.
The Central Bank of China has announced a 50 basis cut in the reserve requirement ratio of qualified financial institutions to support the real economy, injecting 1 trillion yuan in the long-term financial term.