Profits at industrial firms in China plunged in the first two months of this year as factories had yet to fully recover from a COVID-19-induced slump and prices continued to decline.
Industrial profits in the January-to-February period dropped 22.9 percent from a year earlier, the Chinese National Bureau of Statistics said yesterday.
For the entirety of last year, profits declined 4 percent from the previous year.
Photo: AFP
“Even though industrial production rebounded, market demand hadn’t recovered completely,” bureau statistician Sun Xiao (孫曉) said in a statement accompanying the data.
The decline in revenue was greater than the drop in costs, weighing on gross corporate profits, Sun added.
Foreign firms continued to lag behind others, with profits plummeting 35.7 percent in the first two months from the same time a year earlier. Profits fell 9.5 percent for all of last year.
At private firms, profits fell 19.9 percent in the January-to-February period, while those at state-owned enterprises declined 17.5 percent.
The plunge in profits came despite data earlier this month showing that industrial output rebounded in the first two months of the year to 2.4 percent after COVID-19 restrictions were scrapped and as a wave of infections subsided.
However, producer deflation deepened last month as commodity costs softened, a sign that some factories are cutting prices, resulting in falling revenue and smaller profits.
“Firms were not able to pass on the higher costs to downstream users as demand has yet to recover fully,” Societe Generale SA greater China economist Michelle Lam (林雪潔) said.
Yesterday marked the first time China reported profit data this year. The first two months of the year are typically combined to account for distortion effects because of the Lunar New Year holiday, which can fall in either month. Officials have not released single-month data for profits since June last year.
The economic recovery still faces headwinds from higher-than-expected unemployment and a continued slump in real-estate investment — as well as an uncertain global environment that might weigh on demand for Chinese exports, which are already under pressure.
While China’s industrial production will “rebound,” Australia and New Zealand Banking Group Ltd senior China strategist Xing Zhaopeng (邢兆鵬) said. “The prices will continue to be impacted by global central banks’ tightening monetary policies.”
The decline in industrial profit growth is expected to “narrow markedly going forward,” Xing added.
Hon Hai Precision Industry Co (鴻海精密) yesterday said that its research institute has launched its first advanced artificial intelligence (AI) large language model (LLM) using traditional Chinese, with technology assistance from Nvidia Corp. Hon Hai, also known as Foxconn Technology Group (富士康科技集團), said the LLM, FoxBrain, is expected to improve its data analysis capabilities for smart manufacturing, and electric vehicle and smart city development. An LLM is a type of AI trained on vast amounts of text data and uses deep learning techniques, particularly neural networks, to process and generate language. They are essential for building and improving AI-powered servers. Nvidia provided assistance
DOMESTIC SUPPLY: The probe comes as Donald Trump has called for the repeal of the US$52.7 billion CHIPS and Science Act, which the US Congress passed in 2022 The Office of the US Trade Representative is to hold a hearing tomorrow into older Chinese-made “legacy” semiconductors that could heap more US tariffs on chips from China that power everyday goods from cars to washing machines to telecoms equipment. The probe, which began during former US president Joe Biden’s tenure in December last year, aims to protect US and other semiconductor producers from China’s massive state-driven buildup of domestic chip supply. A 50 percent US tariff on Chinese semiconductors began on Jan. 1. Legacy chips use older manufacturing processes introduced more than a decade ago and are often far simpler than
STILL HOPEFUL: Delayed payment of NT$5.35 billion from an Indian server client sent its earnings plunging last year, but the firm expects a gradual pickup ahead Asustek Computer Inc (華碩), the world’s No. 5 PC vendor, yesterday reported an 87 percent slump in net profit for last year, dragged by a massive overdue payment from an Indian cloud service provider. The Indian customer has delayed payment totaling NT$5.35 billion (US$162.7 million), Asustek chief financial officer Nick Wu (吳長榮) told an online earnings conference. Asustek shipped servers to India between April and June last year. The customer told Asustek that it is launching multiple fundraising projects and expected to repay the debt in the short term, Wu said. The Indian customer accounted for less than 10 percent to Asustek’s
Gasoline and diesel prices this week are to decrease NT$0.5 and NT$1 per liter respectively as international crude prices continued to fall last week, CPC Corp, Taiwan (CPC, 台灣中油) and Formosa Petrochemical Corp (台塑石化) said yesterday. Effective today, gasoline prices at CPC and Formosa stations are to decrease to NT$29.2, NT$30.7 and NT$32.7 per liter for 92, 95 and 98-octane unleaded gasoline respectively, while premium diesel is to cost NT$27.9 per liter at CPC stations and NT$27.7 at Formosa pumps, the companies said in separate statements. Global crude oil prices dropped last week after the eight OPEC+ members said they would
RSS