The industrial profit figures cover companies with annual revenues of at least 20 million yuan ($2.91 million) from their core businesses. | Photo credit: ALY CHANSON

Profits of industrial companies in China fell 22.9% in the first two months of 2023 from a year earlier, official data showed on Monday, as the factory sector struggles to emerge from the slump caused by the disruptions related to COVID.

The contraction followed a 4% decline in industrial profits for the whole of 2022, according to data from the National Bureau of Statistics (NBS), indicating a pessimistic start to the year for factories as a whole.

The industrial profit figures cover companies with annual revenues of at least 20 million yuan ($2.91 million) from their core businesses.

Monday’s data follows a flurry of economic indicators that show an uneven path to recovery after a deadly three-year battle with the pandemic.

Industrial production growth accelerated to 2.4% in January-February, according to data released earlier this month.

As retail sales returned to growth, real estate investment continued to decline despite robust government support aimed at reviving the struggling housing market.

Beijing is seeking to put the economy back on the path to recovery and set a modest growth target of around 5% for this year at the annual parliamentary meeting this month.

China’s central bank this month unexpectedly reduced the amount of cash banks must hold as reserves for the first time this year to help support the economic recovery.

Combined January and February data are released for most economic indicators to smooth out distortions due to the Lunar New Year calendar change.