Chinese industrial profits turned positive again in April: NBS data

The national flag of the People’s Republic of China (Photo: Reuters)

China’s industrial profits turned positive again in April, while first-four-month profits held steady at first-quarter levels, official data showed on Monday, suggesting steps to support the economy had partly worked .

Profits of Chinese industrial companies rose 4.3 percent in the January-April period from the same period a year earlier, data from the National Bureau of Statistics (NBS) showed, unchanged from an increase of 4.3 percent in the first quarter.

In April alone, profits rose 4.0 percent, compared to a decline of 3.5 percent in March.

The rebound in profits followed export-led factory output growth last month, while retail sales unexpectedly slowed, underscoring an uneven recovery.

“Domestic effective demand remains insufficient, while the external environment is still complicated and serious,” NBS statistician Wei Ning said in a separate statement, noting that the foundation for improving industrial profits needs to be consolidated.

Profit problems loom large even for the electric vehicle sector, as declining demand and a brutal price war in the world’s largest auto market weigh on automakers.

Li Auto, one of the few profitable Chinese EV makers, posted a 37 percent profit decline in the first quarter, missing estimates.

The erosion of profits due to signs of accelerating industrial production and the recovery of exports exposes the weakness in domestic demand, strengthening the case for more policy support to support the economy.

Earlier this month, China unveiled “historic” steps to stabilize its struggling real estate sector, with the Ministry of Finance firing the starting gun with the issuance of 1 trillion yuan in long-term special government bonds.

State-owned enterprises saw profits fall 2.8 percent in the January-April period, foreign companies posted a profit of 16.7 percent, while private sector companies recorded a 6.4 percent increase, the NBS data showed .

The industrial profit figures cover companies with annual sales of at least 20 million yuan ($2.76 million) from their main activities.

First print: May 27, 2024 | 9:16 am IST