China industrial profits’ growth pace stirs doubts about economic recovery

China’s industrial profits fell in March and slowed gains for the quarter compared to the first two months, official data showed on Saturday, raising doubts about the strength of a recovery for the world’s secondbiggest economy.

Cumulative profits of China’s industrial firms rose 4.3 per cent to 1.5 trillion yuan in the first quarter from a year earlier, National Bureau of Statistics (NBS) data showed, slower than a 10.2 per cent rise in the first two months.

Profits fell 3.5 per cent year-onyear in March. NBS did not break down monthly numbers but said during the release in March that monthly numbers had extended gains since August 2023.

The reading complemented a slew of economic indicators for March such as retail sales and industrial output that pointed to frail domestic demand despite solid first-quarter GDP growth.

Signs of the economy gaining momentum in the opening months were shown to have gradually given way to concerns over lacklustre demand at home.

If profit growth continues to slow, the repair of the asset and liability structure of manufacturing firms and their willingness to expand investment may also be affected, said Bruce Pang, chief economist and head of research in Greater China at JLL.

High-tech manufacturing industry led the growth with the 29.1 per cent rise in profits in the first quarter, NBS said in a statement, adding the recovery of firms’ profits was uneven.

Profits in the automobile manufacturing industry grew 32 per cent in January-March.

China’s industrial profit numbers cover firms with annual revenue of at least 20 million yuan from their main operations.