Profits at China’s state-owned enterprises (SOEs) fell 63% to 412.01 billion yuan (US$57.79 billion) in the first four months of 2020 from a year ago due to the negative impact of the anti-epidemic measures, according to the Ministry of Finance (MoF).
This came after a year-on-year decline of 59.7% in the first quarter. The MoF said the economic activities of SOEs have been recovering.
SOEs have generated combined revenue of 17.03 trillion yuan during the period, down 9.2% from a year earlier. Their operating costs decreased 6.2% to 16.92 trillion yuan, the ministry said.
SOEs’ debt-to-asset ratio edged up to 64.6% at the end of April, compared with 64.5% at the end of March.
Profits of Chinese industrial firms with annual revenue of more than 20 million yuan dropped 27.4% to 1.26 trillion yuan in the first four months of this year from the same period last year, according to the National Bureau of Statistics (NBS). The contraction narrowed from the 36.7% year-on-year decline in the first quarter.
The NBS said the decline was narrowed amid government efforts to coordinate Covid-19 containment and economic growth.
In April alone, industrial profits edged down 4.3%, recovering from the 34.9% drop registered in March as production and sales rebounded on the nationwide restoration of economic activities, said Zhu Hong, an NBS statistician. Increasing investment returns in April, as well as a low comparison base last year, also contributed to the improvement, Zhu added.
However, corporates’ profitability has remained “not optimistic” amid the yet-to-recover market demand, retreating industrial prices and rising cost pressure, he said.
The People’s Bank of China (PBoC), the country’s central bank, said it would strengthen its counter-cyclical measures, further deepen the reform of loan prime rates and push for lower real lending rates.
PBoC Governor Yi Gang said the country’s economic fundamentals for sustained sound growth remained unchanged despite uncertainties, reiterating the central bank will pursue a prudent monetary policy in a more flexible and appropriate way.
The central bank vowed to strike a balance between epidemic containment, restoring economic activity and risk control, enhancing counter-cyclical adjustments and steadily pushing forward with work on defusing risks, Yi said in an interview with the Financial News and China Finance, the PBOC-affiliated newspaper and magazine.
Yi noted the PBOC would use a variety of monetary policy tools and develop new ones to maintain ample liquidity and ensure M2 money supply and aggregate financing grow at notably higher rates than last year.
BYD Co Ltd, a Shenzhen-based automobile maker, said its subsidiary BYD Semiconductor intended to raise a total of 1.9 billion yuan by issuing new shares to strategic investors.
The new strategic investors will include Sequoia Capital China, CICC Capital and State Investment Innovation. BYD Co Ltd said it would continue to push forward with its plan to spin off BYD Semiconductor.
Tencent Holdings, a Hong Kong-listed technology firm, said it would invest 500 billion yuan in new infrastructure over the next five years.
The infrastructure would focus on cloud computing, artificial intelligence, blockchain, server, data center, supercomputing center, Internet of Things operating system, 5G network, audio and video communication, network security and quantum computing. Tencent will build several large-scale data centers nationwide.
Alibaba Cloud, also known as Aliyun, said last month it would invest 200 billion yuan in the research and development of core technologies such as cloud operating systems, servers, chips and networks, as well as the establishment of data centers, over the next three years.
The story was written by Xu Jiangshan and Nadeem Xu and first published at ATimesCN.com.