10/28/2020, 16.03
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Fall in industrial profits, doubts about China’s GDP growth

Profits of major industries fell by 2.4 per cent between January and September. The negative data come on top poor employment, consumer spending and retail sales data. Discrepancies on the amount of fixed investments have been observed. For a China Beige Book expert, China’s economy is closer to 5 per cent decline rather than growth.

Beijing (AsiaNews) – The latest figures for China’s economy have raised eyebrows with experts increasingly doubtful about their veracity. If they are to be believed, China’s GDP figures show a strong recovery after a major decline caused by the COVID-19 pandemic.

In addition to rising youth unemployment in September (+4 per cent on annual basis) and the contraction of consumer spending in the first three quarters of 2020 (-6.6 per cent), the drop in profits of the country's major sectors has experts scratch their head.

According to China’s National Bureau of Statistics, Chinese companies with annual revenues above 20 million yuan (US$ 3 million) reported a 2.4 per cent drop in profits between January and September compared to the same period last year.

Companies in the state sector registered the biggest losses (-14.3 per cent) whilst those in private sector lost far less (-0.5 per cent).

According to available data, the national GDP grew by 4.9 per cent in the third quarter of the year, a sharp rise compared to the losses in the first three months of the year (-6.8 per cent), when the country was in the throes of the coronavirus crisis.

However, several observers note discrepancies in the official data, especially as regards to investments in fixed assets (buildings, highways, machinery, etc.).

In the first nine months of the year, these investments grew by 0.8 per cent, for a total of 43.7 trillion yuan (US$ 6.5 trillion), rising 0.8 percent and achieving positive growth for the first time this year. However, last year, the figure was 46 trillion yuan (US$ 6.8 trillion).

The Chinese Bureau of Statistics tried to explain the discrepancy by saying that the amount of fixed investments between January and September 2019 was revised after the economic survey last November, a figure that was not then made public.

For Derek Scissors, chief economist of the New York-based China Beige Book, if fixed investments actually fell as did retail sales, China's third quarter GDP is closer to a drop of 5 per cent rather than 5 per cent growth.

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