China July industrial profits down as COVID curbs, heatwaves hit

A worker wearing a face mask works on a production line manufacturing bicycle steel rim at a factory in Hangzhou, Zhejiang province. China Daily via REUTERS/File Photo

SHANGHAI  -Profits at China’s industrial firms sank in July, reversing previous gains as fresh COVID-19 curbs dragged down demand and squeezed factory margins, while power shortages due to heatwaves threatened production.

Profits at China’s industrial firms fell 1.1 percent in January-July from a year earlier, wiping out the 1 percent growth logged during the first six months, the National Bureau of Statistics said on Saturday.

The bureau did not report standalone figures for July.

Factory production and activities in major manufacturing hubs like Shenzhen and Tianjin were hit in the month as fresh COVID curbs were imposed. In July, China’s industrial output growth slowed to 3.8 percent on-year from 3.9 percent in June.

Searing heatwaves have swept across China’s vast Yangtze River basin since mid-July, hammering densely populated cities from Shanghai to Chengdu.

Liabilities at industrial firms jumped 10.5 percent from a year earlier in July, matching the 10.5 percent increase in June, the statistics bureau said.

China’s economy narrowly escaped contraction in the three months to June, as strict COVID control restrictions and a distressed property sector pummeled demand.

Policymakers are striving to prop up the flagging economy by doubling down on infrastructure spending.

The industrial profit data covers large firms with annual revenues of over 20 million yuan ($3 million) from their main operations.

($1 = 6.8715 Chinese yuan renminbi)