In the first 10 months, the profits of Chinese manufacturing businesses were hurt by COVID measures and there was a drop in factory-gate prices.
According to data from China’s National Bureau of Statistics on Sunday, November 27, from January to October, industrial profits were down 3.0% from the same period last year. That exceeds the 2.3% drop that happened in the first nine months.
The data analysis statement reads, “The COVID outbreaks in China and the recession risks of the global economy may add more pressure to the recovery of industrial profits.”
When deflation hits due to low consumer demand, it’s hard for businesses to raise prices, which cuts into their profits. In October, producer prices went down for the first time in almost two years. This was because commodity prices around the world and China’s domestic demand both went down due to spreading COVID measures.
Last week, the number of cases reached a record high, which led major cities like Beijing and Guangzhou to curb residents’ movement. Some experts have cut their GDP estimates because the reopening has been slow and difficult.