China’s state-owned enterprises (SOEs) posted record high earnings for last year, despite economic pressures weighing heavily on private sector growth, the South China Morning Post reports.
Government-owned companies took in RMB 29.1 trillion ($4.3 trillion) in 2018 – a 10.1% increase from 2017, according to official figures. Profits grew even faster by 15.7% compared with a year earlier, totalling RMB 1.2 trillion.
SOEs benefitted from stable growth in the domestic economy and recent measures to bolster the public sector, said Peng Huaguang, a spokesman for the state asset oversight agency which published the data. Better risk management and cost cutting during the slowdown also helped SOEs achieve record profits.
In contrast, China’s private sector continues to show signs of struggle amid tighter financing conditions towards the end of the year. In addition to slowing growth, private firms are facing increasing default rates on outstanding loans, which non-performing loan ratios as high as 4.7% in some sectors compared with the average 1.7% across all Chinese bank loans, according to Moody’s estimates.