China's industrial firms see revenue growth in 2022, profits dip

BEIJING -- China's major industrial firms grew steadily in terms of revenue in 2022, but their profits dipped due to certain factors impacting beyond expectations and a high base of comparison, official data showed Tuesday.

The combined revenues of industrial firms with an annual main business revenue of at least 20 million yuan ($2.96 million) rose 5.9 percent year-on-year in 2022, the National Bureau of Statistics (NBS) said.

Their total profits stood at 8.4 trillion yuan in this period, down 4 percent from a year earlier, the NBS data revealed.

Senior NBS statistician Zhu Hong highlighted the improvement in the profit structure of the industry's upstream and downstream links in 2022, despite contraction in profits.

If excluding sharp declines in a few industries, such as steel and oil processing, the overall profit growth rate in 2022 would be elevated to 5.6, Zhu said.

A total of 21 out of 41 major industries saw growth in profits in the period, up from 20 in the Jan-Nov period.

The oil and gas exploitation sector saw profits jump 1.1 times compared to a year earlier, while the electric and heat power production and supply sectors, and coal mining and washing sectors reported profit increases of 86.3 percent and 44.3 percent, respectively.

Equipment manufacturing and basic consumer goods served as bright spots for the industrial sector during the period, Zhu said.

With a sustained recovery, the combined profits of the equipment manufacturing industry rose 1.7 percent year-on-year, data showed. The sector contributed over a third of the country's total industrial profits in 2022, providing a strong impetus for the overall industry.

Meanwhile, the profits of basic consumer goods companies also logged steady expansion, as pro-growth policies spurred the market demand, according to Zhu. Thanks to the warming market, producers of alcoholic drinks, tea, and tobacco posted rapid growth in profits in 2022.

Despite the overall profit decline in 2022, signs showed that China's industrial firms were on the right track to profit recovery, as the country continued to emerge from its COVID shadow.

Tuesday's data showed that the purchasing managers' index for China's manufacturing sector rebounded to expansion territory in January 2023, after three consecutive months of contraction, with major sub-indices posting surges.

However, Zhu still warned against challenges, including relatively high costs for businesses and uncertainties in the domestic and external environments.

Looking ahead to the next stage, Zhu urged efforts to better coordinate the epidemic response and economic and social development, boost market confidence, proactively expand domestic effective demand, and consolidate the foundation of profit recovery for industrial firms, so as to push for an overall upturn in the industrial economy in 2023.