Industrial profits in China rebound to positive growth

China’s Industrial Profits See Growth in April Amid Government Push for Manufacturing Boost

In a positive sign for the Chinese economy, profits at industrial companies in China saw a return to growth in April. This development underscores Beijing’s efforts to bolster the manufacturing sector, which has been a key focus as other areas of the economy continue to face challenges in regaining momentum.

According to data from the National Bureau of Statistics, industrial profits at businesses with turnovers exceeding Rmb20mn ($2.8mn) increased by 4% year-on-year in April. This growth comes after a 3.5% decline in March. Year-to-date, profits are up by 4.3%, maintaining the same rate as in the first quarter of the year.

The improved performance in April follows a rise in Chinese exports during the same month, driven by the government’s push for “high-quality development” in manufacturing. This initiative has drawn criticism from Western leaders over concerns of overcapacity in the sector.

Recent economic data in China is being closely monitored for insights into the government’s strategy as it navigates challenges such as a slowdown in the property sector and weak consumption. Notably, exports in April grew by 1.5% year-on-year in dollar terms, while industrial production surged by 6.7%.

Analysts at Goldman Sachs highlighted strong profit increases in equipment manufacturing, with notable growth in electronics and transportation equipment. Despite these positive trends, there are concerns about insufficient domestic demand, prompting calls for the acceleration of efforts to develop new productive forces in the country.

The data also revealed a divergence in profit performance among different types of companies, with state-owned firms seeing a decline in profits while private and foreign businesses experienced growth. This underscores the complex dynamics at play in China’s industrial landscape.