China's Q1 industrial profits return to growth amid US tariff woes

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 a trade war with the United States. 

With Washington's aggressive tariffs threatening to hit China's crucial export engine hit 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. 

Cumulative profits of China's industrial firms rose 0.8 per cent to 1.5 trillion yuan ($205.86 billion) in the first quarter from a year earlier, the National Bureau of Statistics (NBS) 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 boosted consumption and supported investment, but deflationary pressures persisted, ripping into corporate profits and workers' incomes as enterprises tried to navigate rising trade disruptions. 

Beijing has made increasingly louder 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. 

The ruling Communist Party's Politburo on Friday pledged to support firms and workers most affected by the impact of US tariffs, also saying new monetary tools and policy financing instruments will be set up to boost innovation, consumption and foreign trade. 

Profits at state-owned firms dipped 1.4 per cent in the first quarter. Private-sector companies saw a 0.3 per cent fall, but foreign firms recorded a 2.8 per cent gain, according to a breakdown of the NBS data. 

Industrial profit numbers cover firms with annual revenue of at least 20 million yuan from their main operations.  (Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)