What’s new: China’s central government-owned enterprises reported slower growth in revenues and profits in the first quarter, reflecting mounting business uncertainties caused by the Covid-19 resurgence and the war in Ukraine.
State-owned enterprises (SOEs) directly under the central government’s control posted revenue of 9 trillion yuan ($1.4 trillion) in the first three months of 2022, up 15.4% from the same period last year. In the first quarter of 2021, central SOEs posted 30% growth in revenues.
Combined net profit rose 13.7% to 472.3 billion yuan, data from the State-owned Assets Supervision and Administration Commission (SASAC) showed. A year earlier, profits surged 220% amid a strong recovery from the pandemic.
The context: Business disruptions caused by recent domestic pandemic outbreaks and surging commodity costs spurred by the war in Ukraine eroded incomes of some of China’s biggest state businesses, a SASAC official said.
Coal-fired power plants, aviation companies, automobile manufacturers and tourism operators were among those that suffered the most with expanding losses. Industrial enterprises in the coal mining, oil and gas sectors enjoyed faster growth due to commodity price rises, according to the SASAC.
Slower growth of central SOEs offered a snapshot of headwinds facing China’s entire economy. GDP expanded 4.8% in the first quarter, down 13.5 percentage points from the same time a year ago, the latest official data showed.
Contact reporter Han Wei (weihan@caixin.com) and editor Bob Simison (bob.simison@caixin.com)
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