Again, Chinese company profits are collapsing like 2020

Chinese business
Chinese business

There have been many economic crises in China, including the “zero-Covid” policy and the real estate crisis.

There have been over 4,800 Chinese companies that have released their earning for the first half of the year. Out of these companies, more than half of them made a net loss.

The number of companies that are posting a decline in net profit is almost as high as in 2020 when companies witnessed their worst earnings season on record caused by the initial coronavirus outbreak.

The number of companies reporting a rough first-half in 2019 is higher than in any other year. In 2020, about 780 companies reported losing money.

The world’s second largest economy, China, buys a lot of products on the global market. If earnings from those companies suffer, it can cause an economic crash that affects other parts of the world due to their price-setting and consumer demand.

Natixis found that oil and other energy commodities have retreated due to the increasing use of AI, semiconductor factories are seeing a slowdown in orders.

Recently, in Sichuan province- a city of Chengdu’s restrictions due to an outbreak of Covid-19.

China’s economic growth weakened in the second quarter to 0.4%, its lowest since 2020, and it may slow to 3% or less. China’s recent economic slowdown is not only a cause of external factors but also caused by domestic structural problems such as excess capacity and excessive leverage.

There has been a rise in concern and debate over the recent heat wave that has swept across Southern China, causing some provinces to shut down factories.

“Nomura analysts predict a difficult period for the economy and markets if Beijing doesn’t begin easing its zero-Covid policy by March of 2023.”

With China’s tech bubble popping, companies like Alibaba and Tencent are struggling to compete. Alibaba reported flat revenue for the second quarter, and Tencent posted its first quarterly sales decline.

In some sectors of the economy, 2018 has already been the worst year in at least one prior record.

Sanya has imposed citywide static control to curb new COVID-19 outbreak on Aug 12, 2022 in Sanya, Hainan Province of China.

Three of China’s biggest airlines all reportedly took a combined $7.2 billion dollar loss, and they attribute the losses to travel disruptions due to Covid curbs and a depreciating yuan.

Although China has a weaker currency, it still continues to pay for aircraft imports in dollars. The added costs that come from servicing its debt in terms of the US currency is tough on the airline industry.

Properties in the Philippines have gone down because of the country’s housing market in 2017

The housing sector, which accounts for as much as 30% of its GDP, has been crippled by a government campaign since 2020. The campaign has resulted in an increase in the amount of new borrowing.

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