PROFITS at China’s industrial companies rose in April as exports returned to growth in the same month, giving a boost to the economy.
Industrial profits at large-scale Chinese companies increased 4 per cent from a year earlier in April, according to data published by the National Bureau of Statistics on Monday. The April uptick reverses a drop in March that ended seven straight months of increases.
China’s strong industrial output has become a source of tension with countries including the US and Europe, which have criticised Beijing for flooding the global market with cheap goods, particularly in new energy sectors.
Trade frictions look set to escalate as China has vowed to take resolute measures against new tariffs from the Biden administration and hinted at 25 per cent car tariffs that would affect European and US carmakers.
Chinese policymakers are relying on the country’s industrial producers to offset weak domestic demand and help the economy meet this year’s growth target of around 5 per cent. But weaknesses within the world’s second-largest economy are weighing on activity.
In April, growth in consumer spending unexpectedly cooled to the slowest pace since 2022 while key metrics for the property sector deteriorated across the board. Factory-gate prices remained stuck in deflation, as they’ve been since late 2022, with the producer price index sliding 2.5 per cent in April from a year earlier.
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All of this has left authorities under pressure to prop up the domestic market with more fiscal and monetary stimulus.
Economists expect the central bank to cut interest rates this year, while the government has announced a programme to boost consumer spending on cars and household appliances by offering subsidies for trade-ins of older models.
Earlier in the month, the government also announced a broad rescue package for the property sector, though analysts doubt the measures will be enough to end a years-long real estate slump. BLOOMBERG
