FX.co ★ China’s industrial profits drop

Last month, China’s industrial profits posted a significant decline. Experts believe that it was caused by a slowdown in manufacturing activity. As a result, Beijing had to boost pro-growth measures to stabilize the economy hit by the trade dispute with the US.

Industrial profit growth has decelerated since November 2018, analysts emphasize. In April of 2019, revenues went down by 3.7 percent to 515.4 billion yuan ($74.8 billion) on a yearly basis. According to data released by the National Bureau of Statistics (NBS), the indicator increased only in March this year reaching 13.9 percent. NBS representative Zhu Hong said that the March results had benefited from companies actively buying industrial goods. However, a decrease in sales in April of 2019 greatly affected earnings.

For the first four months of the year, overall industrial profits fell by 3.4 percent to 1.81 trillion yuan, compared to the same period of 2018. The indicator dropped to 3.3 percent in the first quarter of 2019. In the period from January to April of 2019, profits in telecommunications and electronic equipment manufacturing, which are the most vulnerable to US tariffs, declined by 15.3 percent. Experts note that only Chinese extraction sectors showed strong increases.

Beijing has beefed up countermeasures to support national manufacturers in response to slowing economic growth and higher tariffs imposed by the US. Special attention was given to companies experiencing financial difficulties. Besides, Chinese authorities pledged to lower taxes and increase infrastructure spendings. China’s central bank also announced a cut in the reserve requirement ratio for regional banks. These measures are expected to considerably support the country’s economy.