China’s industrial gains recovered in May, signaling a shift in the fortunes of sectors such as oil refining following the devastation caused by the coronavirus blockade earlier in the year.
Profits from large-scale industrial companies rose 6 percent yoy in May, after declining 4.3 percent in April, marking the first return to growth this year.
Economic activity has rebounded as coronavirus blockades have been lifted in most parts of the country, but China still faces winds against the sharp recession in the global economy, as well as in domestic consumption.
“Market demand remains relatively weak amid the epidemic, and the sustainability of the earnings recovery needs closer examination,” said Zhu Hong, a senior statesman with the China National Bureau of Statistics in a statement.
Authorities attributed the May recovery to an improved outlook for oil refining, energy, chemicals, and iron and steel. Oil prices have dropped this year and the statistics office said lower costs and increased demand had benefited these companies: Oil refineries’ profits increased 8.9 percent from a year earlier.
However, the increase in May could not compensate for the very poor performance at the beginning of the year. Profits from China’s top industrial companies fell 19.3 percent on-year in the first five months of 2020 due to the impact of the Covid-19 impact, official data showed.
China began closing in late January, and although restrictions were lifted in much of the country two months later, it has taken much longer to return to full production with workers still subject to quarantine restrictions and supply chains in the Alien seriously affected.
Certain sectors have been more affected than others. Earnings from the mining industry in the first five months of the year decreased 43.6 percent year-on-year, manufacturing earnings fell 16.6 percent and earnings from private companies fell 11 percent during the same period, China’s statistical office said.
Separate data released over the weekend showed tourist travel and spending fell dramatically from the previous year during the three-day Dragon Boat Festival that ended Saturday.
Tourism spending during the period was 69 percent lower than the previous year at Rmb12.3bn ($ 1.7bn).
China closes for several vacation breaks during the year during which companies are generally required to give their employees free time. Holidays are traditionally a high point for consumer spending and travel. Tourism contributed more than 11% to the Chinese economy in 2019.
However, the number of tourists who visited establishments during the recent holidays decreased approximately half the previous year to 49 million, according to data from the Ministry of Culture.
During China’s May Day five-day break this year, 115 million people took domestic tourism trips, contributing Rmb47.6bn in tourism revenue. The transport ministry reported 79 million trips during the dragon boat festival, without providing data from last year.
