ChineseOwned by central and local governments in public companies ve public holdings‘s profits decreased by 2.1 percent in the first 8 months of the year compared to last year. Chinese Ministry of Finance According to the data announced by , in the January-August 2024 period, the total revenues of these companies were 53.81 trillion yuan (approximately 7.64 trillion dollars), while their total profits were 2.88 trillion yuan (approximately 410 billion dollars).
While revenues increased, profits decreased
According to the Ministry of Finance data, the total revenues of public companies increased by 1.4 percent in the 8-month period compared to the same period last year. However, in the same period, profits decreased by 2.1 percent to 2.88 trillion yuan. This indicates that economic conditions for China’s public sector are below expectations.
Debt rate is increasing
The ratio of public companies’ debts to assets increased to 64.9 percent as of the end of August. This shows that the financial burdens of public companies continue to increase and they have difficulty balancing their financial structures. The increasing debt burden, especially of companies owned by local governments, also increases the risk perception of the Chinese economy in general.
Serious profit decline in industrial companies
The total profits of industrial enterprises with an annual turnover of over 20 million yuan (about 2.84 million dollars) in China in August decreased by 17.8 percent compared to the same period last year. The total profitability increase in the January-August period was limited to only 0.5 percent. This sharp decline in industrial companies contributes to the weakening of profitability across the country.
Economic recovery efforts and challenges
The Chinese government has recently introduced various incentive packages and monetary policy tools in order to achieve economic recovery goals and ensure financial stability. However, this decrease in profits in public companies shows that the desired revival in the economy has not yet been achieved and the lack of demand continues. The recession, especially in the real estate sector and some industrial areas, negatively affects the income and profitability of these companies.
Risks and expectations in the medium term
The decline in profitability in public companies increases the risks to the financial structures of local governments. Particularly high debt ratios may increase the likelihood of these companies to reduce their capital and investments in the future. Experts emphasize that China should accelerate reform steps to balance debt management for public companies and create a more sustainable financial structure.
Source: www.dunya.com
