A sharp drop in profits in the Chinese economy in 2023

Foreign firms in China continued to record worse results, with their collective profits falling by 35.7 percent in the first two months of this year compared to last year. China’s entire private sector saw a year-on-year decline of 19.9 percent in the same period, while profits at state-owned enterprises fell by 17.5 percent.

Despite a recent rebound of 2.4 percent in industrial production seen in the first two months of the year due to the waning presence of COVID-19 restrictions, profits have still declined.

Michelle Lam, an expert on mainland China at Societe Generale, told Bloomberg that companies cannot pass on higher costs to downstream users through further product price increases as demand has yet to recover fully.

Officials have yet to release monthly earnings data since last June.

Eric Zhu, an economist, described Bloomberg Economics that they wished China’s industrial profits to witness a smaller reduction in the first two months of 2023 corresponded to 2022. The revival in activity still needs to do more for the bottom line. It will require more time for demand and confidence to strengthen.

China’s peace proposal put the US in an awkward position

The meetings between Chinese President Xi Jinping and Russian President Vladimir Putin in Moscow put the Washington administration in an awkward position on the sidelines of the event. At the same time, the leaders of the two countries, which the US considers the main rivals, discussed Beijing’s peace proposal for Ukraine.

US officials expressed deep skepticism about the Chinese idea, saying it would reward Moscow by consolidating its territorial gains.