Recent Statistics show that China’s economic situation is getting worse. Analysts said Chinese tech giants would report their worst quarterly earnings on record.

According to data released on July 31 by the National Bureau of Statistics of China, the manufacturing purchasing managers’ (PMI) index in July was 49, a decrease of 1.2 percentage points compared with June. In addition, the composite manufacturing PMI output index was 52.5, down 1.6 percentage points compared with June.

Zhao Qinghe 趙慶河, a senior statistician at China’s National Bureau of Statistics, said, “China’s economic prosperity has declined, and the foundation for recovery still needs to be consolidated.”

Chinese manufacturers continue to be squeezed by high raw material prices, a trend that has reduced profit margins, while concerns about a global recession have hurt export prospects.

Bruce Pang, chief economist and research director at Jones Lang Lasalle, said, “Growth in the third quarter could face a bigger challenge than expected as the recovery is slow and fragile.”

Under the influence of slow economic growth, some of China’s tech giants are expected to face their worst earnings reports.

According to Refinitiv, an American-British global provider of financial market data and infrastructure, Alibaba Group Holding and Tencent Holdings are expected to post negative quarterly revenue growth for the first time.

E-commerce leader Alibaba is estimated to post revenue of about $30 billion, a 1.22% decline from the April-to-June period last year.

It is expected that Tencent Holding will see its revenue decline 2.12% to about $20 billion.

Refinitiv also pointed out Alibaba rivals and Pinduoduo are estimated to post their slowest revenue growth at 3.9% to 2.3%, respectively.

China’s technology sector has laid off thousands of workers to reduce costs and scale down amid the economic downturn and China’s strict “Zero Covid” policy.

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