Profits at Chinese industrial companies contracted again in the January-November period as tight COVID-19-related restrictions disrupted factory activity and supply chains, but analysts see better long-term economic prospects after a U-turn in COVID policy.

Industrial profits fell 3.6% in January-November from a year earlier to 7.7 trillion yuan (1.11 trillion US dollars), according to data released Tuesday by the National Bureau of Statistics. This figure contrasts with the 3.0% drop recorded between January and October. Separate data for November was not released.

Zhu Hong, a chief statistician with the National Bureau of Statistics, highlighted the rebound in COVID-19 outbreaks and sluggish demand in November, which slowed industrial production and increased pressure on Chinese companies, according to a statement from the Office.

Analysts have seen profits cut as much from anti-virus restrictions in big manufacturing hubs like Guangzhou and Zhengzhou, as well as the lingering weight of a protracted housing crisis and slowing exports.

However, they hope that a solid recovery can begin next year as the economy reopens, although a further slump is likely in the short term as the removal of restrictions leads to a sharp increase in infections.

Industrial production last month grew just 2.2% from a year earlier, below expectations for a 3.6% rise according to a Reuters poll, slowing significantly from 5.0% growth. registered in October.

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