business

China Industrial Profit Growth Accelerates on Improved Margins

Updated on
  • April industrial profits rose 21.9 percent from year earlier
  • Profit boosted by improved margins at steel, chemical sectors
Oreana Financial Services’ Isaac Poole discusses manufacturing in China and his outlook for the economy.

Profit growth at Chinese industrial companies accelerated, snapping a streak of slowing expansion since October, as factory output remained robust.

Industrial profits advanced 21.9 percent in April from a year earlier, versus a 3.1 percent increase in March and 16.1 percent in January and February combined. Total profits for the month were 576.03 billion yuan ($90.1 billion), the National Bureau of Statistics said Sunday.

The acceleration was bolstered by higher output, rebounding factory inflation and improved profit margins particularly in the steel, chemical and auto industries, the bureau said in a separate statement. Industrial output climbed 7 percent last month, exceeding forecasts, though decelerating investment and retail sales signal a looming economic slowdown.

“The notable recovery in industrial enterprise profitability in April indicates that China’s domestic growth remains resilient,” Eva Yi, senior economist at China International Capital Corp. in Hong Kong, said in a research note. Meanwhile, there are some “early signs of stress from the recent changes in the industrial enterprise balance sheet.”

China’s supply-side reform continues to help cut industrial companies’ costs and leverage, the bureau said. The nation’s total industrial profits in the first fourth months climbed 15 percent from a year earlier to 2.13 trillion yuan, Sunday’s data showed.

— With assistance by Jing Yang, Xiaoqing Pi, and Yinan Zhao

(Updates with economist’s comment in fourth paragraph.)
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