BEIJING – China’s industrial firms’ profits shrank at a slightly slower pace in January-March but the decline remained in the double-digits as the economy struggled to fully recover despite the country’s exit from its zero-COVID policy.
Profits at these firms fell 21.4 percent in the first three months from a year earlier, cumulative data released by the statistics bureau showed on Thursday, as the factory sector remained underpowered by the crippling pandemic.
The decline compared with a 22.9 percent slump in industrial profit in the first two months, data from the National Bureau of Statistics (NBS) showed.
In March alone, industrial profits fell 19.2 percent, according to a rare data breakdown provided by the NBS.
Industrial earnings fell 4.0 percent in 2022, and the latest data underline the gloomy conditions facing China’s vast factory sector as global demand is hit by slowing world growth.
The Thursday announcement followed a raft of indicators showing an overall patchy recovery at the start of the year.
Retail, services and infrastructure spending have gathered pace, while factory output has lagged amid weak global growth. An unexpected surge in China’s exports in March was considered unlikely to sustain due to the weakening global outlook.
The economy expanded by 4.5 percent year-on-year in the first three months of the year, beating market expectations and marking the strongest growth in a year but its resilience looks likely to be tested by rising unemployment and debt risks.
An official with China’s central bank said last week that a recovery in Chinese consumer demand needs time to pick up due to the “scarring effect” of COVID-19, but there is no basis for any long-term deflation.
Industrial profit data covers firms with annual revenues of at least 20 million yuan ($2.89 million) from their main operations.
Meanwhile, China’s job market remains tough, and it is becoming especially hard for college graduates to find jobs, vice Human Resources minister Yu Jiadong said on Thursday.
China’s cabinet on Wednesday unveiled plans to boost employment, including supporting financial institutions to offer loans to small firms and issuing subsidies to firms that hire college graduates or unemployed young people.
“Employment is steady, but under pressure, steady but also worrying, and the employment pressure for young people such as college graduates remains very big,” Yu told a news conference.
The government will strive to achieve its job creation target this year, Yu said, while noting the uncertainty hanging over the global economic outlook.
The latest job-supporting steps come as the world’s second-largest economy is staging a gradual but uneven recovery from one of its worst showings in nearly half a century last year.
Efforts will be made to support firms hiring more people, and a proportion of unemployment insurance fees will be returned to firms that refrain from laying off workers, Yu said.
The cabinet said that China would issue subsidies to some firms that hire college graduates and unemployed youths till the end of this year and would encourage state-owned firms to expand their recruitment.
The government aims to create around 12 million urban jobs in 2023, up from last year’s target of at least 11 million.
A record 11.58 million college graduates will hit the job market this year, with the economy still feeling the impact from COVID-19 curbs that were removed in late 2022 and a crackdown on tech and education sectors.
China’s private firms, which account for over 60 percent of output and 80 percent of urban employment, have been hit hard by COVID-19 lockdowns and restrictions over the past three years.
