BEIJING—China’s industrial firms posted their first annual decline in profits in four years in 2019, as the slowest economic growth in almost 30 years and a bruising trade war with the United States hit the country’s factories.
Official data released on Feb. 3 showed industrial profits declining 3.3 percent on an annual basis to 6.1996 trillion yuan ($897.96 billion) in 2019, compared with the 2.1 percent dip in the January-November period, the National Bureau of Statistics (NBS) said on its website. It was first full-year decline since 2015 when profits fell 2.3 percent.
The figures, however, predate the significant worsening of the coronavirus outbreak seen in January, which economists expect to seriously hurt economic growth in the first half of 2020.
The coronavirus, which have infected scores of people in China and around the world, could drag China’s economic growth to 5 percent or lower in the first quarter, analysts say.
China’s economic growth cooled to its weakest in nearly 30 years in 2019 amid its trade war with the United States.
Analysts expect Beijing to step up liquidity and credit support for the economy but such measures are unlikely to turn the economy around in the first quarter as the virus may further erode domestic demand.
For the month of December, profits fell 6.3 percent from a year earlier to 588.39 billion yuan ($85.22 billion), erasing the gain seen in November, the data showed.
The contraction in last year’s profits came mainly from slowing sales and increasing raw material and labor costs, said Zhu Hong, an official with the statistics bureau in a statement released alongside the data.
Profits in key industries like steel, petrochemicals and automobiles fell markedly, said Zhu.
For the whole of 2019, profits at state-owned industrial firms dropped 12.0 percent, while private-sector profits rose 2.2 percent.
Liabilities at industrial firms grew 5.4 percent year on year at end-2019, versus a 5.3 percent increase as of end-November.
By Roxanne Liu and Ryan Woo