Profit rebound: Shoppers on Nanjing East Road in Shanghai. 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%. — Bloomberg
BEIJING: China’s industrial profits returned to growth in the first quarter, official data shows, 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 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% to 1.5 trillion yuan or about US$205.86bil in the first quarter from a year earlier, the National Bureau of Statistics (NBS) data showed yesterday, reversing a 0.3% decline in the first two months. In March alone, profits rose 2.6% year-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%, 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 pledged last Friday 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. — Reuters
