China’s industrial profits returned to growth in the first quarter, official data showed on Sunday, but are likely to come under further pressure amid the trade war with the United States.
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With Washington’s aggressive tariffs threatening to hit China’s crucial export engine and no time frame yet for any bilateral trade talks, economists and investors are waiting for the Chinese government to roll out more support measures to cushion the blow to the world’s second-largest economy.
The cumulative profits of China’s industrial firms rose 0.8 per cent to 1.5 trillion yuan (US$206 billion) in the first quarter from a year earlier, the National Bureau of Statistics data showed, reversing a 0.3 per cent decline in the first two months.
In March alone, profits rose 2.6 per cent on-year.
China reported stronger-than-expected economic growth in the first quarter as government stimulus measures boosted consumption and supported investment, but deflationary pressures persisted, ripping into corporate profits and workers’ incomes as enterprises tried to navigate rising trade disruptions.
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‘Fake news’: Chinese officials dismiss claims of US trade war consultations
‘Fake news’: Chinese officials dismiss claims of US trade war consultations
Beijing has made increasingly loud calls on exporters to find local buyers as an alternative to the US market, now effectively frozen after Washington hiked tariffs on Chinese goods by 145 per cent, but many export-reliant factories have decried weak domestic demand, price wars, low profits and payment delays in the Chinese market.