China's Economic Transformation Fails! Foreign Firms Fled, Overseas Orders Cut In Half! What's Next?

After three years of enduring the pandemic, China's economic situation has grown increasingly precarious. Unexpectedly, the post-lockdown economy has proven even more challenging than during the lockdown. On April 27th, China's National Bureau of Statistics unveiled the latest economic data for the first quarter, revealing a 21.4% year-on-year decrease in net profit for large-scale industrial enterprises across the nation, down to a mere 1.52 trillion yuan. The manufacturing sector suffered a precipitous decline in profits, with an approximate 30% drop year-on-year. Several industries experienced even more staggering profit reductions, such as petrochemicals, electronics, and non-ferrous metals, with year-on-year profit decreases exceeding 50%, and oil industry profits nose-diving close to 100%. This undoubtedly constitutes an economic collapse.

These large-scale industrial enterprises, representing the nation's pillar industries, are now grappling with the severe economic downturn. A meticulous examination of the data shows that state-owned holding enterprises, despite benefiting from favourable loan conditions and achieving a total profit of 589.2 billion yuan, still experienced a 16.9% year-on-year decrease, indicative of a widespread economic recession. Joint-stock enterprises reported total profits of 112.9 billion yuan, reflecting a 20.6% year-on-year decline; private enterprises posted profits of 389.4 billion yuan, a 23% year-on-year reduction. Foreign-funded and Hong Kong, Macao, and Taiwan-funded enterprises realised total profits surpassing 330 billion yuan, with the most substantial decline at 24.9% and marking the most severe consecutive decrease in years. This not only highlights the diminished domestic demand within the Chinese market but also signifies the exodus of numerous foreign-funded enterprises.