Chinese Industrial Profits Sink Further as COVID Disruptions Linger

By Ambar Warrick 

Investing.com-- Chinese industrial profits continued their decline in January to September, data showed on Thursday, amid continued disruptions from COVID lockdowns and fears of new U.S.-led headwinds to the technology sector. 

Industrial profits sank 2.3% between January and September, data from the National Bureau of Statistics showed. The figure was weaker than August’s reading of 2.1%, and is a third straight month of declines for the sector. 

China’s industrial sector slowed substantially this year as lockdowns in major industrial hubs, such as Shanghai, ground economic activity to a halt. While the economy staged a recovery in the third quarter, helped largely by easing lockdowns, it still remained well below pre-COVID levels. 

The Chinese economy also missed the People’s Bank of China’s growth expectations for the third quarter. 

Manufacturing activity barely managed to expand in recent months, with factories facing a slowdown in both local and domestic demand. 

China’s massive electronics manufacturing industry now faces new challenges after the United States blocked the export of U.S.-made semiconductors to the country. The move is expected to severely dent China’s chipmaking ambitions, and is also expected to dent production. 

A recent resurgence in COVID restrictions has also raised concerns over new lockdowns, particularly in major industrial hubs.

China’s strict zero-COVID policy is at the heart of its economic woes this year, as it ground activity to a halt and also soured investor appetite for the country. President Xi Jinping signaled during the recent Communist Party Congress that the country has no plans to scale back the policy. 

A brewing property crisis has also weighed heavily on local demand, as several major real estate developers faced shrinking margins and a severe cash crunch due to a slump in house prices.

Still, the government has rolled out a slew of stimulus measures to support growth. Infrastructure spending is expected to ramp up in the coming months. 

The Chinese yuan fell 0.1% after Thursday's data.