China’s slowing economy hit state-owned enterprises (SOEs) hard as profits in the first two months of 2016 fell at a much faster pace than the same period last year, official data showed Friday.
For the January-February period, SOEs profits sank 14.2% year over year to 222.6 billion yuan ($34.2 billion), according to the Ministry of Finance, compared with a 6.7% drop in the same period of 2015.
In a written statement, the ministry said the state sector continues to face great downward pressure. The worst hit were SOEs run by local governments, their profits plunged 40.9%. Centrally administered SOEs saw profits fall 8.2% year over year.
The industries suffering the most were oil, coal, steel and non-ferrous metals. However, some state firms bucked the trend, especially those the medical and machinery sectors, which posted relatively high profit growth,
The SOEs reported total business revenue sank 5.8% to 6.2 trillion yuan, the ministry said.
By the end of February, combined debts of the state firms jumped 17.9% to 79.7 trillion yuan, while total assets grew 15.6% to 120.3 trillion yuan. The figures, which exclude financial firms, were collected from SOEs in 36 provincial-level regions and those administered by the central government.
China has about 150,000 SOEs, and some have become ossified by declining profitability due to a lack of competition and an industrial glut.