China's economy hammered but Covid testing firms post record profits

China's zero-Covid strategy of endless testing and lockdowns has hammered its economy and taken a toll on company profits, but it has delivered a windfall for test makers, a media report said.

Twelve of China's top Covid testing firms recently posted huge increases in both revenues and net profits for the first half of this year, CNN reported.

Andon Health, which supplies Covid test kits both at home and abroad, reported that its net profit skyrocketed by 27,728 per cent in the first six months of 2022, reaching 15.24 billion yuan ($2.2 billion). It was the biggest increase recorded by any listed company in mainland China, CNN reported.

Meanwhile, its revenue surged 3,989 per cent.

The company benefits not only from China's aggressive testing campaign at home, but also from huge demand in the United States, as its iHealth Lab had recently won US government contracts for supplying rapid antigen test kits.

Assure Tech, a Hangzhou-based diagnostic firm, also posted 1,324 per cent increase in net income because of strong demand in the global Covid testing market.

Other testing firms recorded net profit increases from 55 per cent to 376 per cent for the first six months of the year.

Endless Covid testings, back-and-forth government-enforced lockdowns, and border restrictions have wreaked havoc on China's economy. Its GDP grew only 0.4 per cent in the second quarter, the slowest pace in more than two years, CNN reported.

Major investment banks have slashed their full-year growth forecasts for China to 3 per cent or under, sharply lower than the 5.5 per cent official target set by the government earlier this year.

Chinese companies have also suffered one of their worst earnings recessions on record. More than half of the 4,800 companies listed in Shanghai, Shenzhen and Beijing posted a decline in net profit for the first half of the year - almost as bad as early 2020, when most companies posted their worst earnings season ever, CNN reported.

But the diagnostic firms are one of the biggest moneymakers during the pandemic, benefiting from enormous demand for testing as Beijing sticks with its zero-Covid policy that involves forced quarantines, mass mandatory testings, and snap lockdowns.

From the beginning of the pandemic through April 2022, 11.5 billion tests had been conducted in China, according to the government, CNN reported.

--IANS

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