Chart of the Day: SOE Revenues Are Growing Again — Profits Not So Much

Chinese state-owned enterprises (SOEs) have clawed their way out of the doldrums of the coronavirus epidemic to post cumulative revenue growth for the first time in 2020, though profits are still down on the year, official data showed.

SOE revenue over the first 10 months of 2020 grew 0.2% year-on-year to 49.7 trillion yuan ($7.6 trillion), according to data (link in Chinese) released Thursday by the Ministry of Finance.

The increase marks a stark turnaround from the 11.7% contraction in revenue that SOEs reported for the first quarter, when China’s Covid-19 epidemic was at its peak — another sign the country’s post-outbreak economic recovery remains on track.

Profits are another story. SOEs’ after-tax net profits for the first 10 months of the year were down 11.4% year-on-year at 1.9 trillion yuan, though the contraction had narrowed from a 74.3% drop for the first four months and an 18.5% fall for the first nine months.

In terms of single-month data, the SOEs saw this year’s first revenue and net profit growth in June (link in Chinese).

The liability-to-asset ratio of the Chinese SOEs crept up to 64.5% at the end of October, an increase of 0.3 percentage points from the same time in 2019.

SOEs, especially central government-administered ones, have played a significant role in helping stabilize the Chinese economy during the pandemic.

Contact reporter Luo Meihan (meihanluo@caixin.com) and editor Michael Bellart (michaelbellart@caixin.com)

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